Make-Whole Doctrine Law and Legal Definition

Make-Whole Doctrine is an equitable insurance law principle which holds that in the absence of valid contractual obligation to the contrary an insurer will not receive any of the proceeds from the settlement of a claim, except to the extent that the settlement funds exceed the amount necessary to fully compensate the insured for the loss suffered. Only after the insured has been fully compensated for all the loss the insurer acquires a right to subrogation or is entitled to enforce its subrogation rights. The rule applies to instances in which the insured has recovered from the third party and the insurer attempts to exercise its subrogation right by way of reimbursement against the insured’s recovery. The precise definition of the doctrine varies from state to state, but the concept is nonetheless fairly similar in each state.