What is 'subrogation' in casualty insurance, and how does it apply to auto claims?

Subrogation in casualty insurance follows the same principle as in property insurance: the insurer steps into the insured's legal rights against the responsible third party after paying the claim. In auto claims, the most common subrogation scenario: the insured's collision coverage pays for damage to their car after an accident caused by another driver; the insurer then subrogates against the at-fault driver (or the at-fault driver's liability insurer) to recover the payment. The insured signs a subrogation agreement at the time of payment. The insurer may pursue recovery in the name of the insured. Successful subrogation often results in the insured being reimbursed for their deductible (proportionally) from the recovery. The insured generally cannot release the responsible party from liability through a private settlement that would defeat the insurer's subrogation rights. Subrogation supports the indemnity principle and helps keep premium costs down.