Written by: Safwaan Angamia

Date: 14 August 2025

What Is The Doctrine Of Subrogation?

In the world of insurance law, subrogation plays a vital role in ensuring fairness between insurers, insured parties, and third parties responsible for loss.

Subrogation allows an insurer, after compensating its insured for a covered loss, to recover that amount from the person or entity legally responsible for causing it. This prevents the insured from being unjustly enriched and ensures that the financial burden ultimately rests with the wrongdoer.

The doctrine of subrogation is a principle in South African insurance law that allows an insurer, after compensating the insured for a loss that they suffered, to “step into the shoes” of the insured and recover the loss from a third party responsible for causing the loss suffered by the insured.

The doctrine of subrogation has been defined in Joubert (ed.), The Law of South Africa, vol. 12 (first reissue), as follows:

“Subrogation as a doctrine of insurance law embraces a set of rules providing for the reimbursement of an insurer which has indemnified its insured under a contract of indemnity insurance. The gist of the doctrine is the insurer’s personal right of recourse against its insured, in terms of which it is entitled to reimburse itself out of the proceeds of any claims that the insured may have against third parties in respect of the loss.”

In essence, the insurer acquires/assumes the insured’s rights against the wrongdoer and may enforce those rights by instituting legal action against the third party.

A typical example of subrogation is where a motor insurer pays its insured for damage caused by a negligent third party and then seeks to recover the damages from that third party.

What Are The Requirements That Must Be Met For Subrogation To Take Place?

For subrogation to take place, the following requirements must be met:

•     An insurance contract must exist between the insurer and the insured.
•     The insurer must have indemnified the insured in terms of the insurance contract.
• The insured must have a right of recourse against the wrongdoer.

Only once these elements are satisfied can the insurer rely on subrogation to recover its losses.

What Are The Relevant Case Laws/Subrogation In Practice?

In these types of matters, the question often arises: in whose name should the legal proceedings be instituted? The general practice in South Africa is that the legal proceedings are instituted in the name of the insured; however, the necessity to disclose the insurer’s involvement in legal matters has been tested in the South African Courts. 

Nkosi v Mbatha (unreported)

In the case of Nkosi v. Mbatha, which is an unreported case, it was determined that subrogation must be proved and specifically pleaded. In this matter, the insurer compensated the insured for damages arising from a motor vehicle accident. Pursuant thereto, the insurer instituted legal action against the third party. Most importantly, the legal action was instituted in the name of the insured. The Court dismissed the Plaintiff’s case on the basis that the Plaintiff did not plead subrogation. The court’s decision was taken on appeal by the Plaintiff, which appeal was ultimately dismissed by the Court, and it was stated that subrogation must be pleaded and proved. 

Smith v Banjo [2011] 2 All SA 577 (KZD)

In the case of Smith v Banjo[2011] 2 All SA 577, the court stated at paragraph 12 as follows:

[12] The involvement of the insurer in a lawsuit is irrelevant, and therefore, it is not necessary to plead such involvement. It has already been established that in subrogation claims, the insurer takes the place of the insured. The historical practice in our courts is to allow the insurer to institute action in the name of the insured [Rand Mutual Assurance supra]. Logically, the parties to a suit have the same rights and duties as they would have had had the matter not been a subrogated claim. I agree with the plaintiff’s submission that, from a practical perspective, the insurer’s involvement in the suit is irrelevant. For this reason, it is clearly not necessary for the plaintiff to plead the insurer’s involvement in the suit.”

Ultimately, in the Smith v Banjo matter, it was determined that ownership of a vehicle is sufficient to establish locus standi (the right) to sue, and the involvement of the insurer does not have to be pleaded and proved. It was further stated that the decision of the Nkosi case is not binding on future Courts.

In both the aforementioned matters, the legal proceedings were instituted in the name of the insured, which is the generally accepted practice.

Rand Mutual Assurance Co Ltd v Road Accident Fund 2008 (6) SA 511 (SCA)

In the case of Rand Mutual Assurance Co Ltd v Road Accident Fund2008 (6) SA 51, the court held that unless the wrongdoer will be prejudiced in a procedural sense, the courts may permit the insurer to proceed in their own name. The Court criticised the general practice but was reluctant to abolish it.

In light of the above case law, in subrogated claims,  legal proceedings can be instituted in the name of the insurer or the insured.

As an insurer may institute legal proceedings in its own name or in the name of the insured, the question of unjustified enrichment often arises.

How Can Unjust Enrichment Be Avoided?

In Ackerman v. Loubser, 1918 OPD, it was stated:

“A plaintiff, however, who has received full indemnity for his loss under a contract of insurance and has afterwards recovered compensation in an action for damages against the wrongdoer, is not entitled to a double satisfaction; but, as soon as he has received from the underwriter or insurer the amount for which he is insured, he becomes a trustee for the latter in respect of any compensation paid or payable by the wrongdoer and is bound to hand over to the insurer whatever money he receives from the wrongdoer over and above the actual loss he has sustained, after taking into account the amount he has received under the contract of insurance.”

Having regard to the Ackerman case, the insured who has been indemnified is not entitled to double compensation and is to hand over the funds they received from the third party. In this regard, should the insured not hand over the funds to the insurer, the insurer will have a claim against the insured. 

In conclusion, an insurer, once it has indemnified the insured of the loss suffered, through the doctrine of subrogation, may step into the shoes of the insured and recover the loss from the third party.

The insurer may institute legal proceedings in the name of the insured or in its own name.

Need Legal Assistance With A Subrogated Insurance Claim?

If you require legal assistance with a subrogated insurance claim, recovery proceedings, or defending a claim brought by an insurer, contact Burger Huyser Attorneys. Our commercial and insurance law specialists can guide you through every step of the process, ensuring that your rights and financial interests are fully protected.

 

Contact Burger Huyser Attorneys, and book a consultation.

To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:

Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358;  Midrand call 010 022 4082; Pretoria call 064 548 4838;

Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223