The insurance term for the right to recover from a responsible third party after paying a claim is subrogation.
Subrogation lets an insurer step into the policyholder’s legal position after compensating a covered loss. For example, if an insurer pays to repair a driver’s car after another motorist caused the crash, it may pursue the at-fault driver or that driver’s insurer to recover the amount it paid.
The doctrine serves two related purposes: it helps prevent an insured person from being paid twice for the same loss, and it places the ultimate cost on the party responsible for the damage. Subrogation commonly appears in auto, property, health, workers’ compensation, and commercial insurance claims.
Subrogation is not the same as contribution or indemnification. Contribution generally concerns sharing a loss among multiple insurers, while indemnification describes one party’s obligation to reimburse another for a loss. The insurer’s rights are usually limited to the rights the insured actually had and often depend on policy language, applicable law, and whether the insured has been fully compensated.