Subrogation is a legal process that allows an insurance company to step into the shoes of its policyholder after paying a claim. This means that once the insurer compensates the insured for a loss, it can pursue recovery from the party responsible for that loss. This helps the insurer recoup its costs and keeps insurance premiums lower for everyone. In practice, subrogation often occurs in cases like car accidents or property damage. For example, if Insurance Company A pays for damages caused by Driver B, Insurance Company A can then seek reimbursement from Driver B or their insurance. This process ensures accountability and fairness in the insurance system.