Subrogation in insurance refers to the legal 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 its insured, and if another party is responsible for the loss, the insurer may seek reimbursement from that party to recover the amount it paid to the insured. For example, if a driver causes an accident that damages another person’s car, and the car owner’s insurance company pays for the repairs, the insurer may use subrogation to recover the costs from the at-fault driver or their insurance company.

Subrogation allows insurance companies to mitigate their losses and avoid paying for damages caused by someone else’s negligence or wrongdoing. It helps maintain fairness by ensuring that responsible parties bear the financial consequences of their actions rather than shifting the burden entirely to the insurer and its policyholders.