In Order to sue for Subrogation, Defendant Must Have an Underlying Obligation to pay the Subrogor

In Farm Bureau Ins Co, et al. v TNT Equipment and Employers Mut Cas Co, __ Mich App __; __ NW2d __ (2019) (Docket No. 343307), the Court of Appeals underscored that industry-specific concepts like subrogation and additional insureds should not distract insurance professionals from the fact that an insurance policy is, ultimately, “a contractual agreement between the insured and the insurer….”

Like any other contract, “a court’s task is to determine what the agreement is and then give effect to the intent of the parties” based on “the language of the policy.” Id.

In this case, the Plaintiffs’ subrogation claims failed because the claims were not based on any alleged negligence of Employers Mutual’s insured, and the Plaintiffs’ insureds had no direct rights to coverage under Employers Mutual’s policy. Id. at __; slip op at 9.

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