subrogation
Definition
Subrogation is when your insurance company pays your claim and then steps into your shoes to go after the person who actually caused the loss to get their money back. Think of it as your insurer buying the right to sue on your behalf once they've made you whole. This happens automatically in most insurance policies without you needing to do anything.
Example
A delivery truck crashes into your storefront and your insurance pays $20,000 to repair it, then your insurer turns around and sues the trucking company to recover that $20,000 so the at-fault party ends up footing the bill.
Watch Out
Never sign a release or settlement agreement with the party who caused your loss without checking with your insurer first, because you could accidentally sign away their right to recover their money and end up owing your insurance company.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.