The ongoing assault against subrogation continues. The Connecticut Supreme Court’s January 6th decision in Orlando v. Liburd, should be treated as a practical warning for carriers and subrogation professionals pursuing automobile physical damage recoveries in Connecticut.[1] It instructs us that, unless the policy expressly and effectively disclaims the Made Whole Doctrine as a limitation on the insurer’s subrogation rights, Connecticut courts may scrutinize an insurer’s decision to subrogate against limited third-party property damage coverage when the insured potentially has remaining uncompensated and/or uninsured losses. In short, Connecticut has now made it easier for insureds to bring affirmative “unjust enrichment” claims against their own carrier when the carrier’s subrogation recovery exhausts the tortfeasor’s property damage limits before the insured is fully compensated for all legally recoverable property damages.
The underlying fact pattern in this case is familiar to anyone handling auto subrogation. The insured sustained property damage in a motor vehicle accident. The insurer paid for repairs under the insured’s first-party coverage, then pursued subrogation directly against the tortfeasor’s insurer. The tortfeasor’s property damage limits were limited, and the insurer accepted those limits in satisfaction of its subrogation claim. The insured then alleged that he had not been made whole because he still had uninsured or uncompensated elements of property damage, including categories such as loss of use and diminution in value, and that the insurer’s recovery of the limited liability proceeds deprived him of the primary readily available source of compensation for those remaining damages. The insured asserted a restitution theory, alleging that the insurer was unjustly enriched by taking a limited fund that, in equity, should have been applied first to make the insured whole.
The trial court and Court of Appeals treated the insured’s claim as premature, concluding that it could not be adjudicated until the insured obtained a judgment against the tortfeasor and could demonstrate that the tortfeasor could not satisfy the judgment beyond policy limits. The Supreme Court rejected that approach and held that the dispute was ripe for adjudication. The Court’s reasoning is significant for subrogation operations because it reframes the injury. Under the Supreme Court’s analysis, the actionable harm is not merely the possibility that the tortfeasor may be judgment-proof later. The alleged injury can be the insurer’s present depletion of the limited liability policy proceeds, which, if the insured is not made whole, are equitably prioritized for the insured before the insurer may enforce its subrogation rights. In other words, Connecticut recognizes that the violation of the insured’s priority can itself create a present controversy, even while the underlying negligence action remains pending.
This holding matters because it is common in auto property damage claims for the insured to assert damages that are not fully captured in the collision payment, and which may not be covered at all under the first-party policy. Loss of use, rental expenses beyond policy limits, towing and incidental expenses, and diminution in value are frequently asserted, and many of these items are pursued as tort damages against the at-fault driver. In limited policy situations, if the insurer takes the available property damage limits to reimburse its collision payment while the insured claims outstanding, uncompensated damages, the insurer may face an argument that it has violated the made whole doctrine and has improperly shifted the risk of insufficient recovery from the insurer to the insured. The Supreme Court’s willingness to let such claims proceed without requiring a prior judgment removes a procedural barrier that insurers previously relied upon to dispose of these disputes early and reminds us of the minefield that subrogation professionals must tiptoe through daily.
The operational takeaway is not that insurers cannot subrogate in Connecticut, but that they must implement controls to address uninsured losses before consuming limited third-party coverage. The best risk-management practice is to confirm the insured’s made whole status in writing before pursuing or accepting a settlement that exhausts the tortfeasor’s property damage limits. Ideally, the file should contain a clear written statement from the insured that the insured has no uninsured or uncompensated property damage losses arising out of the loss, or that any such losses have been resolved and waived. This should not be a generic boilerplate document buried in a claims packet. It should be a plain-language representation confirming that the insured is not asserting loss of use, diminution in value, unreimbursed rental charges, towing, storage, or other property-related damages beyond what the insurer paid, and that the insured does not intend to pursue those damages against the tortfeasor or the tortfeasor’s insurer. Where feasible, this statement should also acknowledge that the insured understands the insurer may seek reimbursement from the tortfeasor’s liability coverage and that such recovery may reduce or eliminate the remaining limits available for the insured’s own pursuit.
Subrogation may also proceed if the policy language itself disclaims the Made Whole Doctrine. Connecticut case law intimates that the Made Whole Doctrine can be overridden by contract terms in a plan or policy, and the courts will allow these contract terms to override the application of this equitable doctrine.[2]
When the insured does have uninsured losses or refuses to confirm that he or she is whole, the safer course is to subrogate through a Joint Prosecution Agreement rather than through unilateral recovery. A properly drafted Joint Prosecution Agreement can preserve both parties’ interests and reduce later disputes. The agreement should define the total claim to be asserted, allocate control of litigation or arbitration, and, most importantly, set the allocation of any recovery in advance. That allocation can be negotiated and agreed upon even where the insured will not be made completely whole by the available recovery, so long as the parties knowingly agree on how limited proceeds will be divided. The agreement should expressly address whether the insurer’s recovery will come off the top, whether the insured’s uninsured losses are prioritized first, how fees and costs will be handled, and how any settlement authority will be exercised. It should also address cooperation obligations, documentation, and dispute resolution if disagreements arise about settlement terms or allocation.
Connecticut has now clarified that made whole disputes in auto property damage subrogation are not merely theoretical and not necessarily deferred until the insured has exhausted litigation against the tortfeasor. Subrogation clients should view Orlando as a directive to tighten file documentation, communicate clearly with insureds about uninsured losses, and, when needed, use Joint Prosecution Agreements to manage limited-fund situations responsibly. Doing so will reduce the risk that a successful subrogation recovery becomes the basis for an insured’s claim against the carrier, and it will help ensure that recoveries in Connecticut remain both efficient and defensible.
Practitioners should be aware that the Orlando decision narrows the practical comfort that carriers may have taken from Davis v. Adeoye, a Superior Court decision from 2022.[3] While Davis rejected efforts to repackage violation of the Made Whole Doctrine as a free-standing “negligent subrogation” tort and treated made whole primarily as an allocation principle, Orlando confirms that an insured may nonetheless assert an immediate, justiciable claim against his or her own insurer (pled as “unjust enrichment”) when the insurer’s subrogation recovery exhausts limited third-party liability proceeds before the insured is made whole for all legally recoverable damages, including uninsured components such as loss of use and diminution in value. In other words, after Orlando, Davis remains helpful for the proposition that Connecticut has not recognized a broad tort duty prohibiting an insurer from pursuing subrogation, but Davis is far less persuasive on any argument that insured challenges to premature subrogation must be dismissed as speculative or unripe until the insured first obtains a judgment against the tortfeasor and proves post-judgment collectability.
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[1] Orlando v. Liburd, 2026 WL 41344 (Conn. Jan. 6, 2026).
[2] Automobile Ins. Co. of Hartford v. Conlon, 216 A.2d 828, 829 (Conn. 1966).
[3] Davis v. Adeoye, 2022 WL 16570653 (Conn. Super. 2022).
