Subrogation

Subrogation is a legal term that refers to the substitution of one creditor for another. In the context of insurance, subrogation allows an insurance company to recover the costs of a covered loss from a third party who is legally liable for the loss.

For example, if your car is damaged in an accident caused by another driver, your insurance company will pay for the repairs. However, your insurance company may then seek to recover the cost of the repairs from the other driver's insurance company. This is known as subrogation.

Subrogation is important because it helps to ensure that insurance companies are not left out-of-pocket for the costs of covered losses. It also helps to discourage negligent behavior by third parties.

There are a few important things to keep in mind about subrogation. First, subrogation only applies to covered losses. If your loss is not covered by your insurance policy, your insurance company will not be able to subrogate against a third party.

Second, subrogation is not automatic. In order to subrogate, your insurance company must first file a claim against the third party. If the third party is found liable, your insurance company will be entitled to recover the cost of the loss.

Third, subrogation can take some time. The process of filing a claim and obtaining a judgment against the third party can take months or even years.

If you have any questions about subrogation, you should speak to your insurance agent.