General Insurance PrinciplesQuestion 196 of 716
Subrogation is BEST defined as:
a.The right of the insured to borrow against the policy's accumulated cash value at the contract's stated loan interest rate
b.The right of the insurer that has paid a claim to recover from a third party legally responsible for the loss
c.The substitution of a new beneficiary by the policyowner after the original beneficiary has died
d.The transfer of all ownership rights in the policy to a new owner by a signed written assignment
Explanation
Subrogation lets an insurer that has paid a claim step into the insured's shoes and recover from any third party legally responsible for the loss. It prevents the insured from collecting twice and shifts the cost to the actual wrongdoer.
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)