What is a subrogation clause?

A subrogation clause is a legal document in North Carolina insurance law that transfers the rights and legal obligations of one party to another. This clause typically applies to an insurance company and policyholder. When a third-party is found liable for an insured event, the insurance company typically has the right to collect the costs of the claim from the third-party. The subrogation clause allows the insurance company to step into the shoes of the policyholder and collect these costs on their behalf. This clause also typically allows the insurance company to be reimbursed for the amount collected from the third-party. Subrogation can be beneficial for policyholders. It can help them recover more of their losses when they are the victim of a third-party’s negligence. Subrogation also helps protect the insurance company’s interests. The insurance company is able to collect damages for the policyholder, and hopefully recoup some of the costs it paid out for the claim. When drafting a policy, policyholders and insurance companies should make sure to include a subrogation clause. This clause ensures that both parties have their rights and obligations clearly spelled out in regard to any third-party claims. This can help avoid confusion and clear up any misunderstandings between the parties.

Related FAQs

What is the difference between direct and indirect insurance?
What is the difference between term and permanent life insurance?
What is personal injury protection insurance?
What is the difference between medical insurance and health insurance?
How do insurance rate determinations take place?
What is the difference between life insurance and health insurance?
What is the difference between a surety bond and an insurance policy?
How do insurance companies determine fault in an accident?
What rights do insurance policyholders have?
What is the difference between an insurance policy and a bond?

What is a subrogation clause?

Related FAQs

Related Blog Posts