What happens if an insurer subrogates a claim?

When an insurer subrogates a claim, it typically means that the insurer is seeking reimbursement from the party that is responsible for the loss, often the at-fault party. This process allows the insurer to recover some or all of the costs it incurred while paying the claim to the insured.

Subrogation is an essential part of the insurance process, as it helps keep insurance premiums lower by allowing insurers to recover funds they have paid out in claims. The insured initially receives compensation from their own insurance company for the loss, but when the insurer subrogates, it acts on behalf of the insured to reclaim those costs from the party at fault.

For instance, if a policyholder suffers damages due to another driver's negligence, their own insurance covers the costs initially. Afterward, the insurer can pursue the negligent driver and seek reimbursement. This process does not affect the insured's right to sue, nor does it inherently cause their premiums to increase or their payouts to decrease.

Understanding this function of subrogation illustrates the collaborative approach insurers take to manage claims and reduce their financial impact.