Subrogation refers to the process an insurance company uses to seek reimbursement from the responsible party for a claim it has already paid. It is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured.
Subrogation matters to you if –
- You have a covered loss, and
- You submit a claim to your insurance company, but
- Another party is actually responsible for all or part of the damages (i.e. you have a car accident and the other driver caused the accident, or if damage to your home was caused by a faulty appliance)
In this case, your insurance company may pay your claim, and then seek reimbursement from the other party. It allows an insurer to recover the amount it has paid for a loss by suing the party that caused the loss. This would depend on the circumstances surrounding the loss, the laws in your state, and your policy provisions.