General Insurance PrinciplesQuestion 135 of 474
An insured's home is damaged by a contractor working on the neighbor's property. The homeowner's insurer pays the $40,000 covered loss and then sues the contractor to recover the $40,000. This is an example of:
a.Subrogation
b.Coinsurance
c.Concurrent causation
d.Reinsurance
Explanation
Subrogation is the insurer's right, after paying the insured, to 'step into the insured's shoes' and pursue any responsible third party. It enforces the principle of indemnity by preventing the insured from collecting twice — once from the policy and again from the wrongdoer.
Law Reference: Cal. Ins. Code §2051; industry standardThis topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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