The Taichung Branch of the Taiwan High Court rendered the 106-Shang-Yi-35 Civil Decision on May 16, 2017 (the “Decision”), in which it held that if the actual damages are less than the indemnification already paid by the insurer, the insurer may only recover by way of subrogation up to the amount of such actual damages.
In this case, Individual A collided with two cars (the “Accident “) and sought to collect on the collision insurance from Company B, the insurer. It was subsequently determined that A should be fully liable for the Accident. As the car was damaged beyond repair and B has paid out the insurance indemnification pursuant to the insurance contract, B sought compensation from A for the remaining value of the car after deducting the auction value of the scrap metal.
According to the Decision, compensation should only cover the actual damages of the victim. Although it is true that when seeking damages by way of subrogation on behalf of the victim, an insurer may do so in accordance with Article 53, Paragraph 1 of the Insurance Law if the amount of damage is greater than or equal to the indemnification paid by the insurer, if the amount of damage is smaller than the indemnification paid by the insurer, the insurer may recover up to that amount of damage only.
B paid out NT$1,212,780 in indemnification to the insured, but the market value of the car at issue in January 2014 at the time of the Accident was NT$860,000, and the proceeds from the auction of the scrap metal was NT$161,000. Therefore, B as the appellee lost NT$699,000 over the car at issue. Since the loss was smaller than the amount of indemnification paid, B’s recovery by way of subrogation should be limited to such NT$699,000. The court agreed with this argument and ruled in favor of Company B only in this regard.