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Equity in Insurance Cases: Houseguest Subrogation Clause

The appeals court ruled against requiring a houseguest to be liable to an insurance company for a fire started by their negligence, emphasizing the lack of subrogation rights in such cases. The reversal of subrogation clauses in homeowners' insurance policies is based on equity principles.

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Equity in Insurance Cases: Houseguest Subrogation Clause

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  1. Topic insurance Byron Koukaras PAT Bedara

  2. Summary Of Case • Appeals court held that it would not be in the interest of equity to require a houseguest to be liable to an insurance company that paid for the loss suffered by the homeowner due to a fire started by the negligence of the houseguest. There is no right of subrogation in such instance.

  3. Key Words • Subrogation: The substitution of one person or group by another in respect of a debt or insurance claim, accompanied by the transfer of any associate. • Houseguest: A guest entertained in your house.

  4. Decision • Reversed subrogation clauses in homeowners insurance policies state that the insurer may require an assignment of rights of recovery and that the insured must cooperate. It is a concept rooted in doctrines of equily and applied by operation of law.

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