Definition of Subrogation
Subrogation is the legal doctrine whereby one person takes over the rights or remedies of another against a third party. Rights of subrogation can come in two different ways. Subrogation may be automatic as a matter of law, or it may come by an agreement as part of a contract. In relation to workers' compensation, subrogation has to do with a work-related injury to an employee that is caused by the negligence of a third party, not the employee's employer.
For example, an employee suffers back and neck injuries while making a delivery for their employer when they are rear-ended by another driver‘s negligence, a third party. The employee is entitled to receive workers' compensation benefits for their injuries from their employer or their employer's insurance company. The worker also has the right to sue the third party for damages in a personal injury lawsuit. However, the worker's employer or insurance company has a subrogation interest, which is a right of recovery against the negligent third party. An important thing to remember is that workers compensation is a no-fault type of business insurance. This is not the case in a personal injury lawsuit. In order to recover under subrogation, the employer or insurance company has to show that the third party was at fault in the car accident.