Property Insurance FundamentalsQuestion 193 of 215
After paying the insured the full insured value of a damaged commercial freezer, the insurer claims the damaged freezer itself. This right is best described as which of the following?
a.Subrogation against a negligent third party
b.The insurer's right of salvage in the damaged property after settling the loss
c.Reformation of the insurance contract
d.A coinsurance penalty against the insured
Explanation
Once the insurer has paid the insured the full insured value of a damaged item, salvage rights let the insurer take possession of the damaged property and recover whatever value remains by selling it. Subrogation is different: it lets the insurer pursue a third party whose fault caused the loss.
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