Answer
Subrogation Types
i) Subrogation by equitable assignment (Equitable / Legal Subrogation)
subrogation is not based on any kind of Document; rather it is based on the Insurance policy and the receipt that is issued by the insured, where it is acknowledged that the claim has been paid in full for the loss.
Example: A ship is damaged because of another vessel’s negligence. H&M insurer pays the assured and can then exercise the assured’s rights against the negligent vessel/owner.
ii) Subrogation by contract (Contractual / Conventional Subrogation)
In this type of subrogation, it is evidenced by an instrument (Letter of subrogation). This is done to avoid any kind of dispute regarding the right to claim the reimbursement or settling the priority of claims and also ensuring that the assured offers full co-operation in suing the wrongdoer. This is facilitated by a letter of subrogation that specifically mentions the rights of the insurer & the insured.
iii) Statutory Subrogation
subrogation which arises directly by the act of legislation that vests the right of subrogation with a party or categories of parties.
E.g. Company has taken Insurance policy for its employees. Premium is paid by the company, employees are assured. Company has to pay to employees as per law (due to injury, death). To cover this liability company takes the Insurance. If injury to the employee was due to a third party, recovery is done of amount from 3rd party, Insurance company takes the recovery.