What is the purpose of subrogation in the context of insurance claims?

Subrogation serves a crucial function in the insurance claims process by allowing insurers to recover costs from the party responsible for an incident after a claim has been settled. When an insurance company pays a claim to its insured owed to damage caused by another party, subrogation enables the insurer to step into the shoes of the insured and pursue recovery from the at-fault party. This process not only ensures that the insurance company can recoup some or all of the costs associated with the claim but also helps in keeping insurance premiums manageable for policyholders by reducing the financial impact on the insurer. Thus, subrogation protects the interests of both the insurer and the insured by promoting accountability and sharing the financial burden appropriately.