Which step involves pursuing recovery from a third party after payment of a claim?

Which step involves pursuing recovery from a third party after payment of a claim?

• A. Settlement
• B. Subrogation
• C. Appraisal
• D. Investigation

Answer: (B)

Subrogation is the step where the insurer, after paying the claim, takes on the insured’s rights to pursue the party responsible for the loss. The idea is to recover the amount paid from the third party (or that party’s insurer), so the insured isn’t left bearing the cost twice and the responsible party is held financially liable. For example, if another driver’s negligence caused an auto accident and the insurer pays the insured’s claim, the insurer can seek reimbursement from the at-fault driver’s insurer. Settlement refers to finalizing the claim's payment between the insured and insurer. Appraisal is used when there’s a dispute about the value of the loss. Investigation is the process of gathering facts to determine what happened and who is liable.

Subrogation is the step where the insurer, after paying the claim, takes on the insured’s rights to pursue the party responsible for the loss. The idea is to recover the amount paid from the third party (or that party’s insurer), so the insured isn’t left bearing the cost twice and the responsible party is held financially liable. For example, if another driver’s negligence caused an auto accident and the insurer pays the insured’s claim, the insurer can seek reimbursement from the at-fault driver’s insurer.

Settlement refers to finalizing the claim's payment between the insured and insurer. Appraisal is used when there’s a dispute about the value of the loss. Investigation is the process of gathering facts to determine what happened and who is liable.