IRMI defines Subrogation as :“the assignment to an insurer by terms of the policy or by law, after payment of a loss, of the rights of the insured to recover the amount of the loss from one legally liable for it”
Let us break it down for you in simpler terms. Subrogation is when an insurance company pays for a claim caused by a third party.
For example, suppose you were involved in a car accident where your car was hit by a car that ran a red light. In this case, the other party was totally at fault. Usually your insurance company will pay you for the loss and will try to recover their payment for that loss from the third-party insurance company.
You typically hear this word used when someone is talking about a “Waiver of Subrogation”
A Waiver of subrogation is when someone waives the rights of their insurance companies to recover damage from a third-party company.
Check out our related “Waiver of Subrogation” video for a more detailed explanation of what it is and an example of how it works.
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