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Subrogation To understand subrogation its important to know how society and the law defined subrogation Subrogation by Websters Ninth New Collegiate Dictionary is defined the assumption by a third party of anothers legal right to collect a debt or damages Courts have defined subrogation as when one person has satisfied the obligations of another and equity compels that the person discharging the debt stand in the shoes of the persons whose claims has been discharged thereby succeeding to the rights and priorities of the original creditor FDIC v Coone 1992 US Dist LEXIS 15942 MD FloridaOctober 15 1992 and the principle by which an insurer having paid losses of its insured is placed in the position of its insured so that it may recover from the third party legally responsible from the loss Eastern states health Welfare Fund v Philip Morris Inc 1998 US Dist LEXIS 9716SD New York July 1 1998 Now knowing what subrogation is we can now explore the effects subrogation has on our everyday life If you have any type of insurance then subrogation is part of your life You as the insured pay a premium so that the insurer will stand in your shoes and take financial responsibility for the claim Subrogation is also the natural consequence of indemnification In a perfect world subrogation ensures that the party at partially responsible for the loss will eventually repay the party who has ultimately borne the loss which is the insurer Subrogation is a very specialized form of collection It is the only means by which an insurer can recover its payment under a policy or bond Subrogation can keep rates low by requiring the person who is responsible for the loss to pay for it and not the insurer Recoveries are reflected in the increased premiums for those who are responsible for the loss Or reflected in lower premiums for those policyholders who are not responsible for
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