Subrogation

Subrogation" is a right to recover from another responsible party, once the party seeking to obtain subrogation pays out on a claim above and beyond it's proportionate share of responsibility. For example, you submit a claim under your renters insurance policy for damage to your record collection as a result of your upstairs neighbor's overflowing sink that rained gallons of water into your unit, ruining your collection valued at $2,000. After the insurance company pays the claim, it can seek subrogation from your neighbor or their insurance company. Bonus is that if you paid some of the $2,000 out of pocket to meet a deductible, you may have a right to recover the deductible you paid out of the subrogation recovery obtained by your insurance company.