Legal Definitions - subrogate

To subrogate means to legally substitute one party for another regarding a specific right or claim. This typically occurs when one party pays a debt or fulfills an obligation that was primarily the responsibility of a third party. The party who made the payment then "steps into the shoes" of the original creditor or injured party, gaining the right to pursue the responsible third party for reimbursement.

Here are some examples to illustrate this concept:

• Car Insurance Claim: Imagine a scenario where Maria's car is severely damaged in an accident caused by another driver, Tom. Maria's auto insurance policy covers the damage, and her insurer pays for the full cost of repairs to her vehicle. After paying Maria, her insurance company will often subrogate to Maria's rights against Tom. This means the insurance company now has the legal standing to pursue Tom directly to recover the money they paid out for Maria's repairs.

  Explanation: The insurance company stepped into Maria's position regarding her claim against Tom. Because the insurer paid for the damage that Tom was legally responsible for, they now have the right to seek reimbursement from Tom, just as Maria would have before her insurer paid her.

• Guarantor on a Loan: Consider a situation where Alex guarantees a business loan for his friend, Ben, who is starting a new company. Ben's business unfortunately fails, and he is unable to repay the loan to the bank. As the guarantor, Alex is legally obligated to pay the remaining balance of the loan to the bank. Once Alex pays the bank, he will typically subrogate to the bank's rights against Ben. This allows Alex to then pursue Ben to recover the money he paid on Ben's behalf.

  Explanation: Alex, by fulfilling Ben's primary obligation to the bank, took over the bank's legal right to collect the debt from Ben. Alex now stands in the bank's place to seek repayment from the original debtor, Ben.

• Worker's Compensation and Third-Party Injury: Suppose an employee, Clara, is injured on the job due to a faulty piece of equipment manufactured by an outside company. Clara receives worker's compensation benefits from her employer's insurance carrier for her medical expenses and lost wages. The worker's compensation insurer may then subrogate to Clara's right to sue the equipment manufacturer for causing her injuries. The insurer can then seek to recover the benefits they paid to Clara from the negligent manufacturer.

  Explanation: The worker's compensation insurer, having paid Clara for injuries caused by a third party (the manufacturer), gains the legal right to pursue that third party for reimbursement. They are essentially taking over Clara's claim against the manufacturer to recover their costs.