Article 2011. The contract of insurance is governed by special laws.

Matters not expressly provided for in such special laws shall be regulated by this Code Article 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Note: In case of an insurance taken by the mortgagee alone and for his benefit, the mortgagee, after recovery from the insurer, is not allowed to retain his claim against the mortgagor but it passes by subrogation to the insurer to the extent of the insurance money paid. Should there be a contract before the insurer be subrogated? A: The principle of subrogation inures to the insurer without any formal assignment or any express stipulation to that effect in the policy. Said right is not dependent upon nor does it grow out of any private contract. Payment to the insured makes the insurer a subrogee in equity. (Malayan Insurance Co., Inc. v. CA, G.R. No. L 36413, Sept. 26, 1988) Note: Incapacity of the insured will not affect the capacity of the subrogee because capacity is personal to the holder (Lorenzo Shipping v. Chub and Sons, Inc., G.R. No. 147724, June 8, 2004 What are the purposes of subrogation? A: 1. To make the person who caused the loss legally responsible for it 2. To prevent the insured from receiving double recovery from the wrongdoer and the insurer 3. To prevent the tortfeasors from being free from liability and is thus founded on consideration of public policy What are the rules on subrogation? A: 1. Applicable only to property insurance the value of human life is regarded as unlimited and therefore, no recovery from a third party can be deemed adequate to compensate the insureds beneficiary. 2. The right of insurer against a third party is limited to the amount recoverable from latter by the insured. What if the amount paid by the insurance company does not fully cover the injury or loss? A: The aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. (Art. 2207, NCC) What are the instances where the right of subrogation does not apply? A: 1. 2. 3.

Where the insured by his own act releases the wrongdoer or third party liable for loss or damage from liability The insurer loses his rights against the wrongdoer since the insurer can only be subrogated to only such rights as the insured may have Where the insurer pays the insured the value of the loss without notifying the carrier who has in good faith settled the insured claim for loss Where the insurer pays the insured for a loss or risk not covered by the policy Life insurance For recovery of loss in excess of insurance coverage.

4. 5. 6.