What Is Subrogation, and Why Is My Contract Waiving It?

Subrogation means, in a legal sense, one party has the right to "step into the shoes" of another party to bring a claim for damages against a negligent third party.

Subrogation claims are commonly brought by an insurer against a responsible third party to recover payments that the insurer has already paid to its insured under the policy.

Even though the insurer’s legal right of subrogation generally arises automatically after payment of a claim, most insurance policies contain a standard subrogation clause.

These clauses generally do not use the actual word "subrogation" but rather are identified by the use of phrases such as "Transfer of Rights to Recovery."

The insurer "steps into the shoes" of the policyholder—meaning that it has the same rights as the policyholder to seek recovery against another party—since the policy’s subrogation clause effectively transfers those rights from the policyholder to the insurer.