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
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Frequently asked questions about subrogation
Indemnification is a contractual promise to cover another party's losses directly — Party A agrees to pay Party B's costs if something goes wrong. Subrogation is the right to step into someone else's legal position to recover payments already made. They often work together: an insurer indemnifies you (pays your claim), then uses subrogation to recover from the responsible party.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.