THE PRINCIPLE OF SUBROGATION

Subrogation Principles relating to a situation where: Losses suffered by the insured is the result of an error to the third party (another person). Referring to Article 1365 KUH PERDATA (INDONESIA’S LAW), an innocent third party should pay compensation to the Insured, when the insured also has the insurance policy.

In that case the mechanism or the application of subrogation is, the insured must select one of the sources of indemnity, from Third Parties or from insurance. It should not be from both, because the insured will get beyond the proper replacement (this is not in line with the principle of Indemnity).

If the insured has received indemnity from the third party he will not get compensation from insurance (except where the number of reimbursement from third parties not entirely).
Similarly, if the insured had to get reimbursement from the insurance, he can not sue the third party, even the right to prosecute the guilty parties to III are (based on Article 1365 KUH PERDATA) should be submitted to the insurance company, in which the insurance company would sue to the Party to III (using the right Assured that pass).

For the futher understanding what I have been explaining above, it’s the best one if  I take an example

Example:

My vehicle was hit by someone, said S, i insured vehicle to XYZ Company. After the XYZ Company pays a claim to the party, to me of course, then XYZ act on my party, so that i can make a claim to the party, S.