Subrogation is the protection against damage payments that are neither the asset owner’s nor the insurance company’s fault. The term is mostly used in auto, health insurance and homeowner’s policies. Among these, auto subrogation is most frequently seen.
* Why is subrogation included in insurance policies?
A subrogation in an insurance policy protects the policyholder when the asset gets damaged for no fault of his own. Thus, the insurer can pursue the person behind the damages to pay for them. A subrogation is successful when both the insurer and the insured get paid for the damages.
How does Subrogation work?
For an insurance policyholder, the policy issuer must pay for the damages incurred by the former. However, under subrogation, the right held by the asset holder over the wrongdoer can be transferred over to the insurance company.