Subrogation Definition & Meaning | Insurance Term | CSIMarket
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Glossary

Subrogation

Insurance Term

Subrogation is the legal right of an insurer to step into the shoes of its policyholder after a loss has occurred and recover the amount of the loss from any responsible third party. In other words, when an insurance company pays out a claim to its policyholder for damages caused by a third party, the insurer has the right to recoup that money from the responsible party.

Subrogation is commonly used in the insurance industry to limit the financial burden on the insurer and its policyholders. For example, if a policyholder’s car is damaged in an accident caused by another driver, the insurer can pay for the repairs to the car and then pursue legal action against the responsible driver to recover the cost of the repairs. This helps ensure that the policyholder’s insurance rates don’t go up because of someone else’s mistake.

Subrogation can also benefit the policyholder in some cases. If a policyholder suffers an injury in an accident caused by a third party, the insurer may pay for the policyholder’s medical expenses and then seek reimbursement from the responsible party. This can help the policyholder avoid having to pay out-of-pocket for medical treatment before the responsible party is held accountable.

In summary, subrogation is an important legal concept in the insurance industry that allows insurers to recover losses from responsible third parties.


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