Subrogation is often explained as the carrier stepping into theshoes of the insured; the carrier has paid out for the loss,therefore the carrier is allowed to pursue the at-fault party forreimbursement for that payment. 

A few elements are critical. First, a third party must beresponsible for the loss. Next, the insurer must have compensatedthe insured for damages that the third party is actually liablefor, and the insurer must be obliged to make this payment toprotect its own interest and not just pay it voluntarily.

Subrogation happens frequently when an insureddoesn't want to wait for the other carrier to work through theclaim; the insured can file the claim through his carrier, pay thedeductible and let the carrier collect from the other party. Whenthe carrier does that, the insured's deductible will be returned tohim. This allows the insured to be made whole for his loss, theprinciple of indemnity. Subrogation is readily seen in auto claims,and many insureds prefer to have their own carrier pay them andwait on the deductible reimbursement.

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Christine G. Barlow, CPCU

Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.