What is subrogation in the context of aircraft insurance?

Subrogation in the context of aircraft insurance refers to the right of an insurance company to pursue a third party who may have caused a loss to the insured. This concept allows the insurer to step into the shoes of the policyholder after the insurer pays a claim, enabling the company to recover the amount paid from the party responsible for the damage or loss.

This process is crucial for insurers as it helps them recoup their costs and maintain lower premiums for policyholders. For instance, if an aircraft is damaged due to the fault of another party, once the insurance company compensates the insured for the loss, it has the right to seek reimbursement from the responsible party. This mechanism reinforces accountability among all parties involved, ensuring that those who cause losses bear the financial responsibility for their actions.