When you owe a mortgage loan to one bank and then another bank buys the loan and you now owe the second bank, this is an example of a subrogation.
Origin of subrogationMiddle English subrogacioun ; from Medieval Latin subrogatio ; from Classical Latin subrogatus
subrogation - Investment & Finance Definition
A legal process in which an insurance company pays for a loss and then seeks to recover the money from another party who is legally responsible. The responsible party may be the person who caused the damage or that person’s insurance company. The person who is owed the money assigns his or her rights to insurance benefits to the insurance company that has paid the claim.
subrogation - Legal Definition
- A paying of or an assumption of the debt of one person by another.
- The passing of rights from one party to another by virtue of the second’s assumption of a debt on behalf of the first party;
- In insurance, the right of an insurer to recover from a third party all amounts paid out on behalf of its insured.