What is the definition of Subrogation?
Subrogation refers to the process where the insurance party seeks to recover the claims it already paid. This is a legal process and the insurance company asks the party that is liable for the payment of damages to reimburse the amount of loss it has paid to its policyholder.
For instance, a policyholder claims for medical expenses because of injury due to an accident. Upon investigation, it was clear to the insurance company that the accident was caused by a driver of another car. The insurance company pays for the claims of its clients while going after the guilty party (or his insurance company) so that it will recover the amount it paid for in claims.
This is based on the principle that whoever caused the accident would be liable for the resulting damages.
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