Subrogation
National Real Estate Exam glossary · Transfer Of Title
Definition
The substitution of one party for another with respect to a lawful claim. When a title insurer pays a covered loss, it succeeds by subrogation to the insured's right to pursue whoever caused the defect, allowing the insurer to recover what it paid.
Subrogation in plain English
Subrogation means one party legally steps into another party's shoes to chase down a claim. In plain terms: if your insurance company pays you for damage that was really someone else's fault, the insurer then "inherits" your right to go after that person to get its money back. It's like a friend covering your broken phone up front, and in return getting to collect from the kid who actually knocked it off the table. For title insurance, once the insurer pays out for a problem with the property's ownership records, it can turn around and pursue whoever caused that problem.
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