Subrogation is an important concept in insurance law. There are several reasons why an insurer that has paid for a loss should be allowed to recover from those legally responsible. First, the insured is prevented from recovering twice for the same loss, preserving the principle of indemnity. Second, the insurer is reimbursed for the payment it has made. Third, the tort-feasor, who is legally responsible, is prevented from receiving a windfall by being absolved of liability. "Stated simply, subrogation is a creature of equity having for its purpose the working out of an equitable adjustment between the parties by securing the ultimate discharge of a debt by the person who in equity and good conscience ought to pay it. In Stetina v. State Farm Mutual Automobile Insurance Co., the Nebraska Supreme Court restricted the insurer's right to subrogation on payment of a loss to its insured. If the "no subrogation against insured" rule is interpreted to prevent an insurer from ever having subrogation rights against one insured by it, situations may occur in which the claimant insured is allowed double recovery or where the tort-feasor insured receives the windfall of being absolved of liability, both at the expense of the insurer.
John A. Selzer,
Extension of the No Subrogation against Insured Rule: Stetina v. State Farm Mutual Automobile Ins. Co., 196 Neb. 441, 243 N.W.2d 341 (1976),
56 Neb. L. Rev. 765
Available at: http://digitalcommons.unl.edu/nlr/vol56/iss3/12