What is subrogation?

• A. The insured sues the insurer
• B. The insurance company assumes agency to sue another party
• C. The insured waives all claims
• D. The insurer pays for redecoration

Answer: (B)

Subrogation is the insurer’s right to step into the insured’s shoes and pursue recovery from the party responsible for the loss after the insurer pays the claim. This lets the insurance company sue the at-fault party or their insurer to get back the money it paid to the insured, preventing the insured from collecting twice and helping keep premiums down. For example, after an auto accident where someone else is at fault, the insurer pays the claim and then seeks reimbursement from the other driver.

The other ideas aren’t subrogation: it isn’t the insured suing the insurer, it isn’t the insured waiving all claims, and it isn’t simply paying for repairs or decoration—subrogation specifically involves the insurer taking over the insured’s right to recover from the third party.