What is subrogation in insurance claims?

Subrogation in insurance claims is a common practice where an insurance company assumes the legal right of the policyholder to seek reimbursement from the responsible party after making a claim payout. This process allows the insurance company to recover the costs it has paid out to the policyholder for damages or losses covered under the insurance policy.

How does subrogation work?

When an insurance company pays out a claim to a policyholder for damages or losses, it may then pursue the responsible party to recover the costs incurred. This can involve filing a claim against the at-fault party, their insurance company, or any other liable party to seek financial recovery.

The importance of subrogation in insurance claims

Subrogation plays a crucial role in the insurance industry as it helps prevent policyholders from being financially burdened by the actions of others. By pursuing reimbursement from the responsible party, insurance companies can help offset the costs of claim payouts and keep premiums affordable for all policyholders.

Overall, subrogation is an essential aspect of the insurance process that helps ensure fair and efficient handling of claims while protecting the financial interests of insurance companies and policyholders alike.