What is Subrogation Mean?

This article has everything you need to know to understand what is subrogation mean.

The transfer of one person’s lawful claim, demand, or right to another person or company explains legal subrogation (what is subrogation mean). Explaining it further; if your insurance company pays you for a covered loss that was ultimately someone else’s fault (such as a manufacturer), then your insurance company can seek reimbursement from that third party.

To make it more understandable, here’s an example of subrogation; when an insured driver’s car is damaged because of the fault of another driver, the loss is recovered by the insurance carrier. The insurer repays the insured driver under the terms of the policy and then pursues legal action against the driver at fault.

It takes around 40-65 days for a typical subrogation claim to settle.

Moreover, legal subrogation is a term describing a lawful right held by most insurance companies to legally pursue a third party that caused an insurance loss to the insured, this is done to recover the amount paid by the insurer (due to the claim) to the insured for the loss.

When a third party is pursued by the insurance company to cover the loss, it is said to “step into the shoes of the policyholder,” and hence is said to have the same rights and legal standing as the policyholder when seeking compensation for losses. If the insured lacks a legal standing to claim for its loss or sue the third party then the insurer will also not be able to take legal action against the party at fault.

What is a subrogation agreement?

Before we dive into understanding what a subrogation agreement is, let’s first understand the very basic terms associated with a subrogation agreement; subrogee and subrogor.


Subrogee is the insurance company that assumes the legal right to collect reimbursement for the loss caused by a third party from the third party to the insured. The insurance company makes up for the loss by paying for it to the insured and then claims an equivalent amount from the third-party responsible for the damage so that it can make up for the amount issued to the insured.


Subrogor is the insured who can transfer his/her right of claiming reimbursement for the damage made by a third party to the insurer in return of the payment made to him/her by the insurance company (subrogee) in advance.

So, the subrogation agreement is basically between the subrogee (the insurance company) and the subrogor (the insured) that gives the insurer the legal right to recover the payment made to the insured from the third fault responsible for the fault.

The subrogation agreement is drafted in English and printed in two original copies so that each party shall be provided with one original copy,

No word, figure, or sign is crossed, invalidated, modified, or added, either handwritten or by any means, between the printing and the signing of the original copies.

How long does an insurance company have to subrogate?

There is a statute of limitations on subrogation which is six years. This means that the maximum statute of limitations mandated for subrogation cases is six years.

People often ask how long does an insurance company has to file a legal subrogation claim? And to answer that If the insurer has the right to seek subrogation pay, in most cases it will have three years from the date of the accident to file a claim. As a victim, the insured and his/her personal injury lawyer can negotiate subrogation to ensure that the subrogor receives their fair share.

From the third party aspect, failing to respond to a subrogation letter won’t ease down the situation. The insurance company or its lawyers might intensify the collection process bombarding them with letters and phone calls. If there is still no response from the third party, there are chances that they might just get sued.

Moreover, simple claims for accidents like where the fault is obvious may still take up to 30 days to settle. Ultimately, the time required to complete subrogation usually depends on the complexity of the accident case and clarity of fault for the accident.

What is meant by Salvage and Subrogation?

Salvage and Subrogation refer to the rights of the insured that are automatically transferred to the insurer under the terms of the policy upon settlement of a loss. Salvage applies to proceeds emerging from repaired, recovered, or scrapped property.

Salvage implies that once a claim for a damaged item has been paid, the subrogee (insurance company)  takes ownership of the item. The practice of taking salvage for damaged items is quite common in motor vehicle insurance claims.

Salvage and Subrogation are hence, the assignment of rights by a subrogor (insured party) to the insurance company (subrogee) to repair, recover, or scrap damaged property under a standard policy. Subrogation here then refers to the rights of proceeds from the sale of the damaged property or through third party negotiation.

Salvage Charges

Salvage Charges are amounts paid to protect the item/vehicle from further damage or loss. It can range from being as simple as fixing a broken window by adding a barrier to being as complicated as a salvage company protecting the grounded vessel.

Salvage charges are provided by most marine insurance companies as part of the normal boat insurance policies.

What is subrogation interest?

When there’s an event of an insurance claim, “subrogation” refers to the process by which an insurance company (subrogee) collects money from the third party which is at fault (or their insurance carrier) to recover funds that the subrogor (insured) or the insurer have already paid, including the deductible.

Subrogation interest also referred to as lien  is the right of a third party to receive reimbursement directly from the subrogor’s settlement or judgment in a personal injury claim.  Following an accident, insurance companies, medical providers, or government programs may place a lien or subrogation interest on any settlement or judgment the subrogor (the insured)  obtains.  Those third parties are seeking repayment if someone else is found to be at fault.  Liens or subrogation interests are most often dealt with by medical providers, Medicare, and health insurance plans.

Define Waiver of Subrogation

A Waiver of Subrogation is an agreement that prohibits an insurance company or a subrogee from recovering the money they paid on a claim from a negligent third party. An owner client might sign this agreement with their vendors to avoid being held liable for claims that occur on their job site.

Waiver of Subrogation can be explained as an agreement between two parties in which one party agrees to waive subrogation rights against another in an event of damage or loss. The waiver intends to prevent one party’s subrogee from claiming subrogation against the other party.

The main reason behind clients asking a business to waive their rights of subrogation is because they do not want to be held partially responsible for a loss. When included in an agreement, it prevents the client’s business and its insurance company from seeking a share of the losses paid to prevent any possibility of conflicts.

Waiver of subrogation can either be in a written form or a form of action.


You must now be clear on the idea of subrogation in insurance law and must’ve successfully figured out your answer to what is subrogation mean.

All you need to start with is the understanding of legal terms used within the context like the subrogor and the subrogree to understand what a legal subrogation exactly is. Before you sign a legal subrogation agreement you must know what is subrogation mean and all the related terms like salvage and subrogation, salvage charges, subrogation interest, waiver of subrogation, etc. as discussed in detail in this article.

Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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