In insurance terms, which right allows recovery from the liable party after payment of a claim?

In insurance terms, which right allows recovery from the liable party after payment of a claim?

• A. Subrogation
• B. Indemnify
• C. Peril
• D. Builder's Risk

Answer: (A)

Subrogation is the insurer’s right to step into the insured’s position after paying a claim and go after the party responsible for the loss to recover the amount paid. Once the insurer indemnifies the insured, the insured’s claim against the at-fault party is transferred to the insurer, who then seeks recovery to recoup costs and prevent double compensation. For example, if a third party’s negligence causes damage and the insurer pays, the insurer can pursue that party for reimbursement. Indemnify is about restoring the insured’s financial position, but it doesn’t automatically give the insurer a right to recover from the liable party. Peril is the cause of the loss, and Builder’s Risk is a type of insurance policy, not the recovery mechanism.

Subrogation is the insurer’s right to step into the insured’s position after paying a claim and go after the party responsible for the loss to recover the amount paid. Once the insurer indemnifies the insured, the insured’s claim against the at-fault party is transferred to the insurer, who then seeks recovery to recoup costs and prevent double compensation. For example, if a third party’s negligence causes damage and the insurer pays, the insurer can pursue that party for reimbursement. Indemnify is about restoring the insured’s financial position, but it doesn’t automatically give the insurer a right to recover from the liable party. Peril is the cause of the loss, and Builder’s Risk is a type of insurance policy, not the recovery mechanism.