What does Subrogation allow an insurer to do?

Subrogation allows an insurer to recoup losses from a third party responsible for a loss after they have paid the insured's claim. This process is essential because it enables the insurance company to recover the amount it has paid out to the insured by pursuing the individual or entity that caused the loss. Essentially, when the insurer pays a claim, it acquires the right to pursue legal action against the at-fault party, thus maintaining the principle of indemnity, which ensures that the insured does not profit from a loss while also recovering costs for the insurer. This concept underlies the primary function of subrogation in the insurance industry, making it a critical mechanism for controlling costs and maintaining equitable insurance practices.