What concept describes obtaining funds from another who bears some responsibility for or who also has coverage for the claim?

What concept describes obtaining funds from another who bears some responsibility for or who also has coverage for the claim?

• A. Recovery
• B. Subrogation
• C. Regulatory or statutory liability
• D. Self-administered Plan

Answer: (A)

Subrogation is the process where, after an insurer pays a claim, it steps into the insured’s position to pursue recovery from the party responsible for the loss or from that party’s insurer. This mechanism shifts the financial burden from the insured to the entity that actually bears responsibility, helping to keep insurance costs down by allowing the insurer to recoup paid claims. It also reinforces the principle that the party at fault should ultimately bear the cost. Regulatory or statutory liability refers to legal accountability defined by law, not the method of recouping paid claim funds. A self-administered plan describes how benefits are managed, not the act of seeking recovery. The term recovery is general and can refer to various types of recoupment, but the specific insurance concept for obtaining funds from the party with responsibility or coverage for the claim is subrogation.

Subrogation is the process where, after an insurer pays a claim, it steps into the insured’s position to pursue recovery from the party responsible for the loss or from that party’s insurer. This mechanism shifts the financial burden from the insured to the entity that actually bears responsibility, helping to keep insurance costs down by allowing the insurer to recoup paid claims. It also reinforces the principle that the party at fault should ultimately bear the cost.

Regulatory or statutory liability refers to legal accountability defined by law, not the method of recouping paid claim funds. A self-administered plan describes how benefits are managed, not the act of seeking recovery. The term recovery is general and can refer to various types of recoupment, but the specific insurance concept for obtaining funds from the party with responsibility or coverage for the claim is subrogation.