Subrogation in Insurance: Theoretical and Practical Aspects

Abstract

Master’s final thesis is devoted to the analysis of the conception of subrogation doctrine and its historical background, whereas subrogation traces its roots back to Ancient Roma legal principles. The author analyzes thoroughly the conception of subrogation in Lithuania and in foreign countries and the peculiarities of legal regulation. Forasmuch as the subrogation causes confusion in the legal practice in Lithuania, the author examined selected legal practice cases and summarizes principles and objectives of the subrogation right’s implementation. The author points out that subrogation can be implemented only in a case where loss is caused by a third person; that loss implicates three players: the party that causes the initial loss, i.e., the loss-causer; the party who suffers the loss, i.e., the loss-victim; and the party who is obligated to compensate the loss-victim, i.e., insurer. Master’s thesis reviews three objectives that the implementation of the right of subrogation has to assure: to prevent unjust enrichment of the loss-causer, to assure that the person responsible for the damage could not avoid the responsibility, and to prevent unjust enrichment of the loss-victim. The author researches the circumstances of acquisition of the right of subrogation. The author notes that subrogation does not create new legal intercourse and the party change neither alters the original creditor’s position. The essence of subrogation is revealed in the thesis in accordance with legal system and case law. In order to improve the regulation of subrogation the author presents practical suggestions at the end of the master’s thesis.