With insurance subrogation, there are three parties involved: the insured; the insurer; and a third party who is responsible for the damages to the insured. Under subrogation, the insurance company assumes the right to sue the third party for the amount of the damages reimbursed to the insured.

Subrogation can serve as one of the most valuable investments an insuring company can make.  In most cases, the cost of investigation is minimal while compared to the claim that has been or will be paid out.  With a successful investigation to build a case against the third party, the cost of the claim is significantly lower or completely reimbursed after litigation.