A neighbor negligently starts a fire that damages the insured's garage. The insurer pays the insured for the loss and then sues the neighbor to recover what it paid. This step is BEST described as which of the following?
a.Subrogation
b.Salvage
c.Liberalization
d.Coinsurance
Explanation
Subrogation is the insurer's right to step into the insured's legal shoes and pursue a third party whose conduct caused the loss, up to the amount the insurer paid. The insured cannot impair this right (for example, by releasing the wrongdoer before settlement), and the insured must not recover twice for the same loss.
Law Reference: Subrogation principle; Cal. Ins. Code §22This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
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