Subrogation is the transferal of the right of legal restitution from one party to another. In most first-party property coverages, insurance contracts give insurers the right to pursue recovery on insureds’ behalf against any wrongdoers or tortfeasors. In a sense, the insurer stands in the shoes of the policyholder. Subrogation reflects the equitable principle that the person causing the loss should bear the cost of such loss.

Risk managers may not think a whole lot about subrogation, but they should. Why? There are plenty of reasons.

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