Risk-Stops-Here Rule Law and Legal Definition

Risk stops here rule is a principle of insurance law that precludes a person from invoking the right of subrogation when the party against whom s/he seeks to exercise it has equities equal to or superior to his/her own. Right of subrogation may be invoked against another party only if that party's guilty conduct renders the party's equity inferior to that of the insured.

Risk stops here rule serves as a limit on the doctrine of subrogation. Under the doctrine of subrogation, a person who pursuant to legal liability has paid for a loss or injury resulting from the negligence or wrongful acts of another will be subrogated to the rights of the injured person against such a wrongdoer. The doctrine of subrogation is a creature of equity essentially designed to place the ultimate responsibility for a loss upon the one on whom it justly ought to fall by reimbursing the party who is compelled to pay. The doctrine rests on the policy that a wrongdoer should not go unpunished simply because the victim carried insurance.[Federal Ins. Co. v. Basabe, 1989 U.S. Dist. LEXIS 12357 (N.D. Ill. Oct. 13, 1989)]

Risk stops here rule is also known as the doctrine of superior equities.