In Quebec civil law, the claim must be brought under the insurer’s name, and not under the insured’s name as in Ontario. Once the payment is made, the insurer is subrogated in the insured’s rights, and the right to bring a claim now belongs to the insurer. The insured having been paid by its insurer, no longer has the sufficient legal interest to bring a claim for the subrogated loss. Subrogation is automatic under section 2474 of the Civil Code of Quebec:
2474. The insurer is subrogated to the rights of the insured against the person responsible for the loss, up to the amount of indemnity paid. The insurer may be fully or partly released from his obligation towards the insured where, owing to any act of the insured, he cannot be so subrogated. (…)
That being said, subrogation operates only for payments that are validly made under the policy. If a payment is made where there is no coverage, then there is no subrogation under section 2474 CCQ. As a result, it is a common practice for the defendants to request a copy of the insurance policy and to scrutinize the extent of coverage and exclusions. The defendants may argue that the insurer has not been subrogated in the insured’s rights, which could cause the insurer’s claim to fail (among others, see ABB Inc. v. Domtar Inc., 2005 QCCA 733, 2007 SCC 50; Factory Mutual Insurance Company c. Richelieu Métal Québec Inc., 2009 QCCS 1057, 2011 QCCA 1690).
One way to avoid this hurdle is to obtain a subrogation receipt or an assignment of rights at the time the payment is made (see sections 1637, 1641, 1652, 1653 and 1654 CCQ). We recommend you have your insured sign a subrogation receipt or an assignment of rights along with the proof of loss.
Only insurers, and not reinsurers, can acquire subrogation rights (see Boiler Inspection and Insurance Company of Canada c. H.A. Simons Ltd., 2011 QCCA 1194). Therefore, it is of paramount importance that the reinsurer obtains an assignment of rights at the time payment is made (see sections 1637 and 1641 CCQ).