If you have any type of insurance policy, whether it’s business insurance, homeowner’s insurance or automobile insurance, you have probably come across the word “subrogation” somewhere in your policy terms. However, if you’re like many people, you are probably not entirely sure what it means.
According to Webster, “to subrogate” means “to put in place of another,” or to substitute. In legal terms, subrogation gives another party (typically an insurer or government agency) the right to take the place of another in regard to a legal claim.
Subrogation comes into play when a person sustains damages caused by someone else and is paid by a third party (known as a collateral source) for his damages. For example, if you are in an automobile accident that is another driver’s fault, you have the right to take legal action against the responsible party to be reimbursed for any property damage or injuries you sustain.However, if you submit a claim to your insurance company for those damagesand the insurer pays, the insurer then gets to subrogate any legal claims. In other words, it gets to step into your shoes and sue the responsible party to get its money back.
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