When an insured loss occurs under circumstances that make a third person liable to reimburse the insured, there are various possible ways to adjust the loss among the three persons involved. One solution would permit the policyholder to recover both on the insurance and from the third person, i.e., would permit double recovery for the loss. A second solution would give the third person the benefit of the insurance by denying recovery from him. A third solution would subrogate the insurer to the policyholder's rights against the third person. Combinations of these three solutions are possible by applying sometimes one and sometimes another.
Spencer L. Kimball & Don A. Davis,
The Extension of Insurance Subrogation,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol60/iss7/2