Subrogation is a legal concept often used in the insurance industry, which allows an insurance company to step into the shoes of the insured, after the insurer has compensated the insured for losses. This process gives the insurer the right to pursue any third party that caused the insurance loss, in an attempt to recover the funds paid out to the insured for the claim. When subrogation occurs, the insurer is seeking reimbursement from the responsible party for the claim amount paid to the insured.
Subrogation is important because it helps to hold the correct party responsible for the loss, and it also helps to mitigate the costs for the insurance company. This, in turn, can have an impact on keeping insurance premiums lower for consumers. It is a method of enforcing the principle that the party who has caused the loss should ultimately be the one to pay for it. Subrogation can occur in various types of insurance policies, including auto, health, and property insurance. The right to subrogate can be limited or waived, depending on the terms of the insurance policy or through specific agreements.