Which term describes the insurer's right to recover from a liable party after paying a loss?

Which term describes the insurer's right to recover from a liable party after paying a loss?

• A. Subrogation
• B. Arbitration
• C. Liberalization
• D. Loss Payable Clause

Answer: (A)

Subrogation is the insurer’s right to step into the insured’s shoes and pursue recovery from the party responsible for the loss after the insurer has paid the claim. This lets the insurer recoup the amount paid, prevents the insured from benefiting from the loss twice, and helps keep premiums fair. For example, if your car is damaged in an accident and your insurer pays your claim, the insurer can sue the at-fault driver to recover those costs. The other terms don’t describe this recovery right: arbitration resolves disputes; liberalization refers to broader policy terms; a loss payable clause designates who receives payment, not who recovers from the liable party.

Subrogation is the insurer’s right to step into the insured’s shoes and pursue recovery from the party responsible for the loss after the insurer has paid the claim. This lets the insurer recoup the amount paid, prevents the insured from benefiting from the loss twice, and helps keep premiums fair. For example, if your car is damaged in an accident and your insurer pays your claim, the insurer can sue the at-fault driver to recover those costs. The other terms don’t describe this recovery right: arbitration resolves disputes; liberalization refers to broader policy terms; a loss payable clause designates who receives payment, not who recovers from the liable party.