What does the Subrogation Clause allow the insurer to do?

The Subrogation Clause is a vital component in insurance contracts, as it outlines the insurer's right to step into the shoes of the insured to pursue recovery from a third party responsible for a loss after they have compensated the insured. This clause allows the insurer to assume the rights of the insured to sue for damages against those who caused the loss, thereby enabling the insurer to recover the amount it paid out in claims.

By exercising subrogation, the insurer seeks to protect its financial interests and may recoup costs that could potentially increase premiums for all policyholders if those losses are not recovered. This concept emphasizes the principle of preventing the insured from being unjustly enriched by receiving compensation from both the insurer and the responsible third party for the same loss.

Thus, the Subrogation Clause effectively facilitates the transfer of the legal right to claim damages from the insured to the insurer, enabling the insurer to hold accountable those who were at fault.