The three types of subrogation are equitable subrogation, conventional subrogation, and statutory subrogation. They differ based on where the right of subrogation comes from: legal doctrine (equitable), a written contract (conventional), or legislation (statutory).
Types of Subrogation
Equitable Subrogation: The right to subrogation is established by legal doctrine, though this right may be modified or eliminated with the existence of a contract. An example of equitable subrogation is when an insurance company collects damages from the at-fault party after a policyholder files a not-at-fault claim.
Conventional Subrogation: The right to subrogation is established by a written contract that either exists independently or modifies a legal right to subrogation. An example of conventional subrogation is when the written contract for a car insurance policy gives the insurer the right to recoup the cost of a settled claim on the policyholder's behalf.
Statutory Subrogation: The right to subrogation is established by legislation. This allows an individual to seek compensation from a party with whom they do not have a legal or contractual relationship. An example of statutory subrogation is legislation that allows employees to collect medical expenses from their employer if they're injured while working.
In general, subrogation is a process through which one party pays another party's debt and then collects reasonable compensation. The average individual will likely never be involved in the subrogation process directly, but it's helpful for consumers to have a general understanding of how it works.
Subrogation is most often used in the context of home and auto insurance, when an insurer pays a property damage or injury claim to a policyholder who is not at-fault and then recoups the cost of the claim from the at-fault party's insurer. Most home and auto insurance claims are the result of equitable subrogation modified by conventional subrogation, since the insurer has a legal right to subrogation in addition to a contract with the policyholder.
To learn more, check out WalletHub's guide to subrogation.