After paying the insured for a covered loss, the insurer's right to take over all the insured's legal rights against negligent third parties is known as what?

After paying the insured for a covered loss, the insurer's right to take over all the insured's legal rights against negligent third parties is known as what?

• A. Subrogation
• B. Assignment
• C. Indemnity
• D. Waiver

Answer: (A)

Subrogation is the insurer’s right to step into the insured’s shoes and pursue a negligent third party for the amount paid on a covered loss. Once the insurer pays the claim, the insured’s rights against the party responsible for the damage are transferred to the insurer, who can recover those funds from that party. This prevents the insured from collecting twice and ensures the loss is charged to the party at fault. Recovered sums go to the insurer to offset the claim payment. This concept is distinct from assignment (which moves contractual rights to someone else), indemnity (restoring the insured’s financial position), and waiver (giving up a right).

Subrogation is the insurer’s right to step into the insured’s shoes and pursue a negligent third party for the amount paid on a covered loss. Once the insurer pays the claim, the insured’s rights against the party responsible for the damage are transferred to the insurer, who can recover those funds from that party. This prevents the insured from collecting twice and ensures the loss is charged to the party at fault. Recovered sums go to the insurer to offset the claim payment. This concept is distinct from assignment (which moves contractual rights to someone else), indemnity (restoring the insured’s financial position), and waiver (giving up a right).