In a significant legal development, the Nevada Supreme Court has agreed to address a key question regarding equitable subrogation in the insurance industry. The case, North River Insurance Co. v. James River Insurance Co., will examine whether an excess insurer can pursue an equitable subrogation claim against a primary insurer when a settlement falls within the combined policy limits of both insurers.
Equitable subrogation is an equitable remedy that allows a party, typically an insurer, to step into the shoes of another party to recover costs or damages. This claim doesn’t require a contract between the parties and arises when one party pays for a loss that is ultimately the responsibility of another. According to Nevada’s 1993 ruling in AT&T Technologies v. Reid, subrogation is intended to promote fairness between the involved parties.
In the insurance context, the Nevada Supreme Court has previously stated that an insurer paying a loss is entitled to the same rights as the insured against a third party, as seen in its 2003 decision in Houston v. Bank of America.
