subrogation clause

  

Definition

Provision in property and liability (but not life) insurance policies whereby the insurance company acquires certain rights upon paying a claim of loss under the policy. These rights include the right to (1) take legal action on behalf of the insured party to recover the amount of loss from the party who caused it, and/or (2) to receive full or proportionate amount of benefits (such as disability compensation) paid to the insured under a statutory plan or scheme. The objective of this clause is to prevent the insured party from profiting from an insurance policy.

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