General Insurance PrinciplesQuestion 196 of 315
Subrogation is BEST defined as:
a.The right of the insured to take a loan against the policy
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
d.The transfer of the policy to a new owner
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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Sen Lin, PrepPass Founder · 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)