Subrogation

Subrogation is the act of one party claiming the legal rights of another that it has reimbursed for losses. Subrogation occurs in property/casualty insurance when a company pays one of its insured’s for damages, then makes its own claim against others who may have caused the loss, insured the loss, or contributed to it.

For example, another driver runs a red light and your car is totaled, you have insurance on your car, so you call your insurance carrier and they pay for all of your expenses related to the accident. Once your insurance company realises that the other driver had an insurance policy, they seek reimbursement from the at-fault party’s insurance carrier. Your insurer is “subrogated” to the rights of your policy and can “step in your shoes” to recover their losses.