Policy's Subrogation Clause Forecloses Insurer's Attempt at Equitable Recovery

CHICAGO - A home insurer that failed to obtain an assignment of rights from its insured after settling a claim for water damage cannot maintain an equitable subrogation action against third-party builders, an Illinois appellate court affirmed. American Family Mutual Insurance Co. v. Northern Heritage Builders, L.L.C., et al., No. 1-10-0216 (Ill. Ct. App., 1st Div.).

The Appellate Court affirmed a trial court order dismissing American Family Mutual Insurance Co.'s equitable subrogation action on Oct. 12 because the carrier failed to pursue the subrogation remedy provided by the policy at issue.

Michael P. McGrath filed a claim with American Family …