Published: | Updated: December 16, 2017

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Definition - What does Subrogation mean?

Subrogation is a process that assigns the right to sue for an incident to a third party not involved in the incident. The person who faced damages agrees to transfer this right over and gives up their right to sue the offending party. Without subrogation, the third party would not be able to file a lawsuit.

Insuranceopedia explains Subrogation

Insurance companies usually require subrogation in exchange for paying out a damage claim for a policy. They do so because they want to sue the offending party so they can reclaim the money they had to pay out in damages. Without subrogation, the insured could collect the insurance payout and then sue the offending party afterward. Most insurance policies include a subrogation clause that says the insured agrees to transfers their right to sue to the insurance company in accepting payment for an insurance claim.

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