Subrogation literally means the substitution of one person for another. Under Subrogation, insurers assume, by operation of law or contract, the rights of the insured against the wrongdoer. Where legal, a subrogation right can be asserted when it is determined that an injury was caused by the negligence of another party. This allows an insurance carrier to recover property and related damage expenses paid out as a result of such negligence. Insurance payments must be made before it can subrogate.

      A carrier's subrogation rights can exist under common law, equity, contract, or statute. No matter its origin, a carrier's right of subrogation and its ability to recover a loss, large or small, is a fundamental right of the insurance industry. A successful subrogation program can often mean the difference between profit and loss for the insurer or client. Historically, some insurers have considered subro "found money" because it is a low-risk method of repayment by responsible third party.