What is 'subrogation' in insurance claims?

Subrogation: The insurer 'steps into the shoes' of the insured after paying a claim — acquiring the insured's legal right to recover from the responsible third party.

Example: Driver A causes accident; Driver B (insured) has collision coverage, which pays for vehicle repair. Driver B's insurer has subrogation rights against Driver A's liability insurer to recover the amount paid.

Importance to adjusters: Always identify subrogation potential when settling claims; document the tortfeasor (at-fault party) information; preserve the insured's rights against the third party during the claim; do not settle in a way that waives subrogation rights without proper release; some states require the insured to participate in subrogation recovery efforts.

Waiver: If the insured releases the at-fault party before the insurer is reimbursed, the insured may be responsible for the loss.