In insurance, what is "subrogation"?

Subrogation refers to the right of an insurer to pursue a third party that caused an insurance loss to the insured. When an insurance company pays a claim to the insured for a loss, it can then seek reimbursement from the individual or entity that was actually responsible for that loss. This process helps to ensure that the party at fault ultimately bears the financial responsibility for the damage, rather than the insurance company or the policyholder.

In this context, if a person is involved in an accident caused by another driver and their insurance covers the damages, the insurer can then step in to file a claim against the at-fault driver's insurance. This allows the insurance company to recover the costs it paid out in the claim. Subrogation not only helps to keep premiums more affordable by recouping losses but also serves to discourage negligent behavior by holding at-fault parties accountable for their actions.