What is the insurer's right of subrogation?

• A. The insured can sue the insurer for recovery.
• B. Subrogation reduces premiums retroactively.
• C. Subrogation allows insurer to cancel policy mid-term.
• D. The insurer can pursue recovery from third parties after paying a claim.

Answer: (D)

Subrogation gives the insurer the right to step into the insured’s position after paying a claim and pursue recovery from the party responsible for the loss. Once the insurer indemnifies the insured, it can seek reimbursement from the third party at fault (or that party’s insurer). This prevents the insured from being paid twice for the same loss and helps keep insurance costs fair for everyone. It isn’t about the insured suing the insurer, it doesn’t retroactively reduce premiums, and it doesn’t allow cancellation of the policy mid-term. The insurer’s recovery rights come from pursuing the at-fault party after payment.