Subrogation allows a payer that has covered a loss to assert its insured's rights against the responsible third party. It arises by contract in most policies and by equitable principles independently.
It is distinguished from reimbursement, which is a direct contractual claim against the insured's recovery rather than an assertion of the insured's claim against the tortfeasor.
Alternative Names:
Subrogation Claim, Right of Subrogation
Why it Matters?
Subrogation determines who ultimately bears a loss and frequently complicates settlement, because the tortfeasor's carrier must account for the health plan or compensation carrier's claim as well as the claimant's. Settling without addressing subrogation exposes the paying party to a second demand from the subrogee, which is why releases and settlement agreements should identify and account for known subrogation interests.
Frequently Confused with
Related terms
Frequently asked questions
What is the made-whole doctrine?
Does subrogation apply in workers' compensation?
