Define "subrogation" in the context of insurance.

Subrogation is an important concept in insurance that refers to the insurer's right to recover costs from responsible third parties after they have paid a claim to the policyholder. When an insurer compensates a policyholder for a loss, they may seek to recover that amount from any party that is found to be liable for the loss. This process helps to ensure that the burden of loss does not fall solely on the insurer, especially if another party was at fault.

The subrogation process serves several purposes, including reducing overall insurance costs for policyholders by allowing insurers to recoup some of their expenses. It also discourages negligence, as responsible parties may face financial repercussions for their actions. In this way, subrogation is a mechanism that promotes accountability while also ensuring that insurance resources are utilized effectively.