What does "subrogation" allow an insurer to do?

Boost your readiness for the Tennessee Property and Casualty Exam. Explore detailed flashcards and multiple-choice quiz questions. Get equipped with hints and explanations for each question and ace your exam!

Subrogation is a legal principle that allows an insurer to step into the shoes of the insured after paying a claim, enabling the insurer to pursue recovery from third parties who may have been responsible for the loss. This process helps to prevent the insured from being compensated twice for the same loss and allows the insurer to recoup some or all of the costs incurred due to the claim. By exercising subrogation rights, the insurer can hold the third party accountable and recover the amount it paid to the insured, thereby maintaining overall loss control and keeping premiums manageable for all policyholders.

This concept is crucial in ensuring that the financial responsibility for the accident or damage lies with the party at fault, rather than unfairly burdening the insurer or other policyholders. It underscores the importance of the insurance system, where risk is shared among many, while also upholding accountability. In this context, adjusting premiums based on claims history, modifying policy terms after a claim, or terminating claims due to suspected fraud do not directly relate to the process or rights established by subrogation.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy