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A term used in contracts of insurance, guarantee, etc. It refers to the right of the insurer, etc., to stand in the shoes of the person whose claim he has paid and to take over not only what is left of the property, but all the legal and equitable rights of the insured person, including the right to sue a third party for damages. If an insurer pays for a total loss, he may take over the subject matter and rights attaching to it; in a partial loss, he may take over the rights but not the subject matter.

Reference: The Penguin Business Dictionary, 3rd edt.