Which term describes the insurer's right to recover from a third party the amount paid on behalf of the insured?

Which term describes the insurer's right to recover from a third party the amount paid on behalf of the insured?

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

Answer: (C)

Subrogation is the insurer’s right to step into the insured’s shoes and pursue recovery from the third party responsible for the loss after the insurer has paid the claim. For example, if you’re in a car accident caused by someone else and your insurer pays for repairs, the insurer can sue the at-fault driver (or their insurer) to recover those costs. This mechanism helps prevent the insured from getting paid twice and ensures the responsible party bears the financial burden. It’s distinct from regulatory liability, which is a separate legal obligation imposed by law, and from a generic recovery term that doesn’t specify the insurer’s right to pursue the third party.

Subrogation is the insurer’s right to step into the insured’s shoes and pursue recovery from the third party responsible for the loss after the insurer has paid the claim. For example, if you’re in a car accident caused by someone else and your insurer pays for repairs, the insurer can sue the at-fault driver (or their insurer) to recover those costs. This mechanism helps prevent the insured from getting paid twice and ensures the responsible party bears the financial burden. It’s distinct from regulatory liability, which is a separate legal obligation imposed by law, and from a generic recovery term that doesn’t specify the insurer’s right to pursue the third party.