In which scenario would an Insurer typically invoke subrogation?

Subrogation is a process that allows an insurer to seek recovery of claim payments from a third party that is responsible for causing a loss. In this scenario, when a third party is liable for the damages, the insurer has the right to step into the insured's shoes and pursue the responsible party for reimbursement of the amount paid out on the claim. This mechanism protects the insurer's financial interests and helps maintain fair premiums for policyholders, as it allows the insurer to recover costs that should be borne by someone else.

The application of subrogation is rooted in the principle that the insured should not receive a windfall from their insurance coverage and that the party at fault should be held accountable for the losses they cause. Thus, when a claim is made due to the actions or negligence of another individual or entity, subrogation becomes an important tool for insurers looking to mitigate their losses.