What does subrogation grant an insurer the right to do?

Subrogation is a legal principle that allows an insurance company to step into the shoes of the insured after it has compensated them for a loss and pursue recovery from a third party that may have caused that loss. This process enables insurers to recover the amounts they have paid out in claims from the negligent party, thus helping to ensure that the costs of damages ultimately fall on the party responsible for the harm.

When an insurer exercises its right to subrogation, it acts to recoup its expenses, which can help keep premiums lower for all policyholders by decreasing the insurer's losses. This is particularly important in personal injury or property damage cases, where a third party’s actions resulted in financial loss. Overall, subrogation is a critical element of how insurance companies manage risk and recover costs, thereby promoting accountability for negligent behavior.