The transfer of an insured's right of recovery to the insurer is known as

• A. subrogation
• B. endorsement
• C. assignment
• D. reinsurance

Answer: (A)

Subrogation is the transfer of the insured’s right of recovery to the insurer after the insurer pays a claim. Once a loss is paid, the insurer can step into the insured’s shoes and pursue the party responsible for the damage to recover the amount paid. This prevents the insured from obtaining a double recovery and allows the insurer to recoup its costs, helping keep premiums fair for everyone. The insured usually must cooperate with the subrogation process, and there can be policy terms or waivers that limit it in certain situations. Endorsements are policy changes, assignment is transferring rights to another party, and reinsurance is when an insurer buys risk protection from another insurer.