What is a subrogation clause?

A subrogation clause is a provision in an insurance policy that entitles an insurer to step into the shoes of a policyholder and pursue a claim for reimbursement from a third party. Essentially, the clause allows the insurer to pursue a claim for reimbursement on their policyholder’s behalf. This helps to ensure that an insured does not benefit from another person’s negligence, by collecting money to cover the same loss from both their insurance provider and the party responsible. In Maryland, a subrogation clause is typically included in an insurance policy. This clause will indicate the insurer’s rights to step into the shoes of the policyholder and pursue a claim for reimbursement from a third party. The clause may also provide details about the specific methods and procedures used by the insurer to pursue such a claim. The purpose of a subrogation clause is to help ensure that an insured does not benefit financially from a third party’s negligence. By allowing the insurer to pursue a claim for reimbursement on the insured’s behalf, the insurer is able to collect some or all of the costs associated with the loss from the responsible third party. In turn, this helps to ensure that the policyholder does not have to bear the financial burden of a claim they are not responsible for.

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What is a subrogation clause?

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