What does the term "subrogation" mean?

Subrogation refers to the right of an insurer to pursue recovery from a third party that caused an insurance loss to the insured. When an insurer pays a claim to the insured for damages or losses, they may seek to recover those costs from the party responsible for the loss. This process ensures that the financial burden does not fall solely on the insurer due to someone else's fault, and it helps to maintain fairness in the insurance system. Through subrogation, insurers can reclaim some or all of the funds they've paid out, often by taking legal action against the responsible party. This concept is fundamental in preserving the balance of risk and liability in insurance policies.