Subrogation
Definition
The legal right of an insurance company to pursue a third party who caused a loss to the insured in order to recover the amount paid on the claim. After your insurer pays your claim, they may seek reimbursement from the party responsible for the damage.
When This Matters
A contractor accidentally starts a fire in your home. Your insurer pays your $50,000 claim, then pursues the contractor's liability insurance to recover that amount through subrogation.
Related Terms
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