Which statement correctly defines subrogation in insurance context?

Which statement correctly defines subrogation in insurance context?

• A. The insured may sue the insurer for damages after a loss.
• B. The insurer may recover its claim payment from the responsible third party after paying the claim.
• C. Subrogation applies only to liability losses.
• D. Subrogation requires insured consent in every case.

Answer: (B)

Subrogation is the insurer’s right to step into the insured’s shoes after the insurer has paid a claim, so it can recover that payment from the person or party at fault. After the insurer covers the loss, it can pursue recovery from the responsible third party, preventing the insured from receiving a double recovery and making the at-fault party financially responsible. This concept isn’t about the insured suing the insurer, and it isn’t limited only to liability losses—subrogation can apply to various claim types where a third party is involved. Also, while cooperation from the insured is helpful, subrogation doesn't require the insured’s consent in every case; the insurer’s right to recover comes from the policy and related legal rights, once payment has been made.

Subrogation is the insurer’s right to step into the insured’s shoes after the insurer has paid a claim, so it can recover that payment from the person or party at fault. After the insurer covers the loss, it can pursue recovery from the responsible third party, preventing the insured from receiving a double recovery and making the at-fault party financially responsible.

This concept isn’t about the insured suing the insurer, and it isn’t limited only to liability losses—subrogation can apply to various claim types where a third party is involved. Also, while cooperation from the insured is helpful, subrogation doesn't require the insured’s consent in every case; the insurer’s right to recover comes from the policy and related legal rights, once payment has been made.