Contract Glossary
Subrogation
Definition
The legal right of one party (usually an insurer) to step into the shoes of another party to pursue a claim against a third party. After paying a claim, the insurer 'subrogate', takes over, the insured's right to recover that payment from whoever actually caused the loss. In contract law, subrogation clauses define when and how this transfer of rights occurs.
In Practice
A delivery truck hits your parked car in your office parking lot. Your auto insurer pays $15,000 to repair your car. Through subrogation, your insurer now has the right to sue the delivery company (or its insurer) to recover that $15,000. You don't have to do anything, the insurer handles it. In commercial contracts, waiver of subrogation clauses are common in leases: the landlord's insurer can't sue the tenant for fire damage if the lease includes a waiver, even if the tenant caused the fire.
Common in these contract types
Related contract clauses
Frequently asked questions
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