Subrogation

What Does Subrogation Mean?

Subrogation is a process that grants a third party, not originally involved in an incident, the right to sue for damages. The party that suffered the damages agrees to transfer this right, relinquishing their ability to sue the responsible party. Without subrogation, the third party would lack the legal standing to file a lawsuit.

Insuranceopedia Explains Subrogation

Insurance companies typically require subrogation in exchange for paying a damage claim to the policyholder. This allows them to sue the offending party to recover the amount they paid in damages. Without subrogation, the insured could collect the insurance payout and still sue the offending party independently. Most insurance policies include a subrogation clause stating that, by accepting payment for a claim, the insured agrees to transfer their right to sue to the insurance company.