Subrogation Agreement Example

Subrogation Agreement Example: What is it and Why is it Important?

A subrogation agreement is a legal contract or agreement between two parties, usually an insurance company and a policyholder, whereby the insurance company agrees to pay for any losses incurred by the policyholder, and that the policyholder agrees to assign any rights they may have against a third party who is responsible for those losses.

In simpler terms, subrogation is a legal principle that allows an insurance company to step into the shoes of its policyholders when they make a claim. This means that the insurance company has the right to recover the amount of money it has paid out to its policyholder from the person or entity responsible for causing the losses.

For instance, if you are in a car accident and your insurance company pays for the damages caused to your vehicle, your insurance company can then pursue legal action against the other driver’s insurance company or the driver themselves, to recover the amount they paid you.

A subrogation agreement typically includes important details such as the names and addresses of all parties involved, the specific losses incurred, the amount of money being paid out by the insurance company, and the terms and conditions under which the policyholder is assigning their rights to the insurance company.

Here’s an example of a typical subrogation agreement:


This agreement is made and entered into this [date] day of [month, year] by and between [Name of Insurance Company], hereinafter referred to as the “Insurer,” and [Name of Policyholder], hereinafter referred to as the “Policyholder.”

WHEREAS, the Policyholder has sustained losses in the amount of [insert amount] due to [insert cause of loss]; and

WHEREAS, the Insurer has agreed to pay [insert amount] to the Policyholder for such losses; and

WHEREAS, the Policyholder desires to assign its rights of recovery for such losses to the Insurer.

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree to the following terms:

1. The Policyholder hereby assigns to the Insurer all of its rights of recovery against any person or entity responsible for the losses incurred.

2. The Insurer agrees to indemnify and hold harmless the Policyholder against any and all claims, actions, damages, or expenses arising from any legal proceedings taken by the Insurer in order to recover any amount paid to the Policyholder under this agreement.

3. The Policyholder shall cooperate with the Insurer in any legal proceedings taken for the recovery of the losses.

4. This agreement shall be binding upon and inure to the benefit of the parties, their heirs, executors, administrators, successors, and assigns.

5. This agreement shall be governed by and construed in accordance with the laws of [insert state].

IN WITNESS WHEREOF, the parties have executed this agreement on the date first above written.

[Name of Insurance Company]

By: [Signature of Authorized Representative]

Title: [Title of Authorized Representative]

[Name of Policyholder]

By: [Signature of Authorized Representative]

Title: [Title of Authorized Representative]

In conclusion, subrogation agreements are crucial for insurance companies to recover the amount of money they have paid out for insurance claims. By understanding what a subrogation agreement is and having a good example to follow, you can ensure that your rights are protected and that the terms of the agreement are clear and concise.