What does the right of subrogation allow an insurer to do?

• A. Recover payment from the insured.
• B. Cancel the policy.
• C. Recover payment from a negligent third party.
• D. Pay the insured's claim again.

Answer: (C)

Subrogation is the insurer’s right to stand in the shoes of the insured after paying a claim and pursue recovery from the party at fault. This shifts the loss to the person responsible for the damage, prevents the insured from receiving a double recovery, and helps keep premiums fair by ensuring the responsible party bears the cost.

For example, if another driver’s negligence causes an auto accident and the insurer pays the insured’s claim, the insurer can pursue repayment from that negligent driver or that driver’s insurer.

This doesn’t involve canceling the policy, recovering from the insured, or paying the insured’s claim again, so those options aren’t the right fit.