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Subrogation

Definition - What does Subrogation mean?

Subrogation is the legal doctrine of substituting an individual or entity for another with respect to claims, rights, or securities. There are two ways for subrogation to arise: legally or conventionally, as part of a contract. Subrogation is used in law as an equitable device to prevent unjust enrichment.

Justipedia explains Subrogation

When an individual or entity pays the debt owed by a debtor to his or her creditor(s), that individual or entity becomes the creditor to the debtor and takes over the rights and remedies of the original creditor; this substitution of one creditor in place of another is called subrogation. Subrogation is commonly used in the insurance industry as a legal right in situations where a claim has been paid for by the insurance company. This allows the insurance company to pursue legal action and seek reimbursement from the party responsible for damages.

For example, if X caused damages to Y and Y is reimbursed for damages by his insurance company, the insurance company can sue X for recovering damages it caused Y through subrogation.

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