Which party is entitled to collect damages from a third party in the case of subrogation?

In subrogation, the insurance company is entitled to collect damages from a third party because it is the entity that has paid out a claim to the insured. When the insurer pays for a loss that is the responsibility of another party, it essentially steps into the shoes of the insured to pursue recovery of the amount paid from that liable third party. This process allows the insurance company to recover its losses while also ensuring that the insured does not receive a double recovery for the same loss, which would not be fair or equitable.

In many cases, the insurer will pay the insured for the damages they incurred, and then the insurer will seek compensation from the responsible party to recoup the funds it paid out. This is an essential part of how insurance works, as it helps to maintain the financial integrity of the insurance system and deters negligent behavior by third parties. The insured does benefit indirectly from the subrogation process because it helps keep insurance premiums lower by preventing the insurer from absorbing losses without recourse. However, the direct right to pursue the third party lies with the insurance company after it has settled the claim with the insured.