There are instance where an insured (that is a person who has an insurance cover) will be entitled to compensation from both the insurance company and a third party tortfeasor. The insured has right to such compensation as of right for the injury suffered. An insured can either purse an action against the third party tortfeasor or the insurance company or both. While an insurance company performs his contractual obligation by paying the insured for the damage suffered, it can then commence an action against the third party tortfeasor. This power exercisable by the insurance company is called SUBROGATION.
According to BUSINESS DICTIONARY, subrogation means a legal principle under which an insured party surrenders its rights against a third party to the insurer after claiming and receiving a compensation for an insured loss. Thus subrogation is a legal principle where an insurer, having indemnified an insured, acquires all the rights and remedies of the insured with respect to the damage .It is when the insured step into the shoes of the insured and claim the benefits and obligation accrued to an insured.

The principle of subrogation is now a universally recognized component in most insurance contract. Insurance is a contract of indemnity and thus the principle of indemnity would apply. The principle of indemnity is that a person should not be allowed to benefits from his loss or make profits from his own loss suffered. This principle applies to both the insured and the insurance companies. This means the law frown at a person receiving with both hands that is from the insurance company and the third party tortfeasor.
This right of subrogation is not an automatic right conferred on the insurance company. There are certain requirement that must be fulfilled by the insurance company. Firstly, the insurance companies must have accepted liability for the injury suffered and must have compensated the insured. Where the insurance company has not accepted liability for the injury suffered, it cannot exercise the right of subrogation.as regards payment to the insured by the insurer as a precondition for the right of Subrogation, the insured and the insurance company can agree to postpone the payment till after the proceeding. This was applied in BRITISH INDIA INSURANCE CO. LTD V.ALHAJI KALLA (1965) N.M.L.R 347.
Secondly, the damage or injury suffered by the insured must be connected to that which is covered under the insurance contract but need not be identical. For instance where the risk protected against is theft and the third party damage the subject matter of insurance through fire ,in such situation since the insurance company does not have any liability, therefore they cannot exercise right of subrogation.
The question usually asked is that “is it all money given to an insured as a result of damage caused to his property that fall under the ambit of Subrogation “As a principle of law, any monies or gifts given to an insured person to reduce the loss suffered over the damage on his property is cover by the right of subrogation. This was seen in STEARNS V. VILLAGE MAIN REEF OLD MINING CO. LTD (1905)10 comm.cas.89.However the right does not extend to pure gifts (that is gifts given to an insured which is not to reduce the loss .This position is followed in BURNARD V. RODOCANACHI (1882) 7 App. Cas.333.The question whether a gift is to reduce the loss is determined by who gave the gift. If the gifts is given by the third party tortfeasor, it raise a strong presumption that the gift was given to reduce the loss.
Where the insured commence an action against the third party, it does not excuse the insurance company from fulfilling its contractual obligation. Where the insured received compensation from the third party tortfeasor before the insurance settlement, the insurers are entitled to take that payment by the third party tortfeasor into consideration in assessing the amount payable to the insured.
The question then is who is entitled to the excess money that is difference between the amount an insurance company pay to the insured and the amount paid by the third party tortfeasor for the damage .Based on the principle of indemnity, the insurance company would be entitled to ONLY the amount he paid out to indemnity the insured. Any excess money over and above the sum paid by the insurer belongs to the insured.
The insured, when the right of subrogation is exercisable, must conduct himself in such a manner that the interest of the insurance company will not be frustrated. In Nigeria, the Marine insurance Act made provision for subrogation right of an insurer (that is the insurance company) section 80 of the act states that:
Where the insurer pays for a total loss, either of the whole, or in the case of goods of any goods of any approtionable part, of the subject matter insured, he shall thereupon become entitled to take over the interest of the assured in whatever may remain of the subject matter so paid for, and shall thereby be subrogated to all the rights and remedies of the assured in and in respect of that subject matter as from the time of the casualty causing the loss.”
The question now is what happens to the right of subrogation of an insurer against the insured where the insured deliberately frustrate the insurer from exercising its contractual right of subrogation. The statute did not provide expressly for remedy for the insurer where the statutory right is breached, in plethora of cases, the Nigeria courts have applied the universal Latin maxim UBI JUS IBI REMEDIUM-where there is a wrong there is a remedy. The maxim enjoined the courts to provide remedy for a party that has suffered damage which ordinarily is without remedy. In UNITED MICROFINANCE BANK LIMITED V.EKPAN ADJAKA (2015) LPELR-24541 C.A, the court of appeal held that “the maxim ubi jus ibi remedium Is a principle of justice of universal validity that is available to all legal systems involved in the administration of justice.
In conclusion, the right of subrogation exercisable by an insurer is a right which is recognized by the general principle of law and has been codified under a statute.