Subrogation is a legal concept which allows someone to take someone else's place legally. This concept most often occurs in the context of a debt, with a subrogee taking the place of the creditor, and the subrogee recovering the debt owed to the creditor. The insurance industry routinely uses subrogation to process claims, and it can also appear in some other contexts, such as real estate contracts.
In a classic example of subrogation, Sally gets into a car accident with Jane. The accident is Jane's fault, but Sally gets tired of waiting for Jane's insurance to pay out, and instead uses her own insurance to make repairs to the car. In this situation, Jane or her insurance company owe Sally money, because Jane is at fault for the damage. Sally is the creditor, and her insurance company becomes the subrogee, because it made a payout on her behalf and it wants to recover that money. Sally's insurer has the right to recover the debt from Jane or her insurance and to keep the funds as compensation for the money it paid out.
Subrogation is a routine part of many insurance policies, and it can be used in a variety of ways. For example, a car insurance company which pays out for health insurance may sue a driver's health insurance company to recover the funds it paid out. Likewise, if an injury occurs on the job, someone's health insurance company might sue a company which handles workers' compensation to recover funds paid out to address the work-related injury.
When a contract includes a subrogation clause, it allows someone to stand in legally for someone else. People should read such contracts carefully to ensure that they understand how and when such clauses can be applied. If people are not sure about how subrogation might apply to a particular contract, they should contact a lawyer for more information, and they should also be aware that subrogation can happen without specific consent, as when an insurance company takes action on behalf of someone it insures.
Subrogation can cause confusion and conflict in relationships when two parties end up on either side of a legal dispute. In the example with Jane and Sally above, for instance, if the two women are friends, the subrogation claim against Jane's insurance might cause Jane to become upset at Sally, even though the accident was demonstrably Jane's fault and Jane is genuinely responsible for the damages.
