What is subrogation in property insurance?

What is subrogation in property insurance?

• A. It cancels the insured's policy after a claim
• B. It allows the insurer to pursue recovery from at-fault third parties after paying a claim
• C. It increases the claim payout beyond the policy limit
• D. It prohibits the insured from suing others for damages

Answer: (B)

Subrogation is the insurer’s right to step into the insured’s shoes after paying a claim and seek reimbursement from the person or party responsible for the loss. In property insurance, once a covered loss is paid, the insurer can pursue recovery from the at‑fault third party (or that party’s insurer) for the amount paid. This helps prevent the insured from being unfairly double‑charged and helps keep insurance costs down by making the responsible party bear the cost. It doesn’t involve canceling the policy, it doesn’t increase the claim payout beyond what actually occurred, and it doesn’t prevent the insured from pursuing other avenues of recovery—the insurer simply takes on the recovery effort on behalf of the insured.

Subrogation is the insurer’s right to step into the insured’s shoes after paying a claim and seek reimbursement from the person or party responsible for the loss. In property insurance, once a covered loss is paid, the insurer can pursue recovery from the at‑fault third party (or that party’s insurer) for the amount paid. This helps prevent the insured from being unfairly double‑charged and helps keep insurance costs down by making the responsible party bear the cost. It doesn’t involve canceling the policy, it doesn’t increase the claim payout beyond what actually occurred, and it doesn’t prevent the insured from pursuing other avenues of recovery—the insurer simply takes on the recovery effort on behalf of the insured.