What does Subrogation enable an insurance company to do?

Subrogation is a key principle in the insurance industry that allows an insurance company to step into the shoes of the insured after a loss has been paid out. When an insurer compensates the insured for a covered loss, subrogation enables the insurer to pursue reimbursement from the party that caused the damage or loss, commonly referred to as the at-fault party.

This process helps ensure that the responsible party is held accountable for their actions and reparation is made for the losses incurred. By doing so, the insurance company can recover some or all of the costs it initially paid to the insured, which ultimately helps keep insurance premiums lower for policyholders over time. Thus, the focus of subrogation is directly tied to recovering financial losses from the party liable for the damage.