Individual Insurance

Subrogation gives the insurance company a legal right against a third party. It gives the insurer the right to sue the third party that caused the loss to the insured person. The third party, in this case, is liable for the loss or injury or accident to the insured person. Since the insured person takes the insurance policy from the insuring company or the insurer, the insurer pays for the loss. The insurer, in turn, gets the right to recover the loss from the third party.

In case of critical illness insurance policy, the insured person at his own expense must permit the insurers to perform or do any act of enforcing or securing the criminal rights or remedies against the third party who has caused the loss or injury.critical Illness insurance

This helps the insurers to get the relief or reimbursement from the third party. Such acts can be done before or after the payment by the insurers.

In critical illness insurance, the insured person cannot prejudice the subrogation rights of the insurer in any manner. It becomes vital that the insured person at his own expense provides the insurers with the required assistance and co-operation to enforce the rights.


  • The amouAny recovery made from the third party is first applied to:nt payable by the insurer to the insured under his critical illness policy
  • Cost and expenses incurred by the insurer for the recovery process

The balance amount of recovery is paid to the insurer after accounting for the above costs.

The concept of subrogation in critical illness insurance states that:

  • Insurance company has right to be indemnified for the bills that they have paid for the insured.
  • The insurers steps in the shoes of the insured, to search after the negligent party
  • Even if the illness or injury is caused by a third party or not, the insured is bound to get his medical bills paid by the insurance company
  • The insurance company cannot delay the process or refuse the coverage even if someone else is responsible for the injury caused to the insured


Established in 2010, L.J Engineering has carved a niche for itself in the engineering sector in a short span of time. Though the company has always emphasized on the safe working atmosphere, last year, an accident happened at its workplace when one of its employees got severe major burns.

While working at the site, Rajkamal Sharma, the electrical engineer, got electrical burns due to heat generated from the milling machine. Though he was immediately rushed to a hospital; burns were serious enough to disable him. At the hospital, doctors treated him for his injuries, but he had received third-degree of the burns which covered 60% of his body.

Read More: What is covered under a Critical Illness Insurance Policy?

As Rajkamal had purchased a critical illness insurance policy, his wife approached the insurer for the settlement of the claim. Here, the insurer considered it as a major burn and agreed to cover it under a critical illness insurance policy. Upon receiving the intimation and reviewing all the supported claim documents, the insurer paid a fixed amount to Rajkamal. The amount was sufficed to deal with medical and household expenses. As the accident resulted in disability as well, the critical illness amount acted like a shield for loss of income and helped in covering various expenses of Rajkamal.

Here, critical illness insurance company asked Rajkamal about the reason of burn. He told that the burn happened due to fault in the machinery. The insurance company initiated the investigation and found that the electric fire occurred due to fault in the machinery, and therefore, the insurer filed a case against L.J Engineering for recovering the claim amount that it had paid to Rajkamal.

Here, Rajkamal submitted all the necessary documents to prove the fault of the employer along with giving in writing that he was following all the safety regulations at the time of the accident. He extended his help whenever the insurer asked for so that it could recover the claim amount from L.J Engineering.

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