The legal doctrine that allows an insurer to pursue a third party responsible for a loss is subrogation.
After paying an insured’s covered claim, the insurer may step into the insured’s legal position and enforce the insured’s rights against the person or organization that caused the damage. For example, an auto insurer that pays for repairs after another driver’s negligence may seek recovery from that driver or the driver’s insurer.
Subrogation is intended to place the ultimate financial burden on the wrongdoer and to prevent the insured from receiving double recovery for the same loss. The insurer’s rights are derivative: it generally cannot acquire better rights than the insured had against the third party.
Subrogation is not the same as assignment. Assignment transfers a legal right by agreement, while subrogation typically arises by operation of law or under the insurance contract. Policies may also contain waivers of subrogation, limiting the insurer’s ability to recover from specified parties.