Insurance Topic
Subrogation
A legal doctrine allowing an insurer to step into the insured’s rights to recover from a responsible third party.
Definition
Subrogation is the legal right by which an insurer, after paying a covered loss, acquires the insured’s rights to pursue recovery from a third party whose actions caused or contributed to the loss.
Structural Characteristics
- Loss payment: The insurer indemnifies the insured for a covered claim.
- Transfer of rights: Recovery rights shift from the insured to the insurer.
- Responsible third party: A party legally liable for the loss.
- Recovery action: The insurer seeks reimbursement through settlement or litigation.
Parameters & Conditions
- Arises only after claim payment has been made.
- Limited to the amount paid under the policy.
- Subject to policy provisions and applicable law.
- May be waived by contract or endorsement.
Topic Relationships
Exceptions, Limitations & Boundaries
Subrogation rights may be restricted by contractual waivers, statutory limitations, comparative fault rules, or failure to preserve recovery rights. Insurers cannot recover more than the amount paid under the policy.
Subrogation: Definitional FAQ
Does subrogation affect the insured’s claim payment?
No. Claim payment occurs first; subrogation is a separate recovery process.
Can an insured waive subrogation rights?
Yes. Waivers may exist by contract or policy endorsement.
Who controls the recovery action?
The insurer typically controls recovery once rights are subrogated.