What action does a subrogation clause authorize an insurer to take?

What action does a subrogation clause authorize an insurer to take?

• A. Sue the insured
• B. Sue the responsible third party
• C. Cancel the policy
• D. Pay the claim

Answer: (B)

Subrogation lets the insurer step into the insured’s shoes after paying a claim and pursue recovery from the party at fault. The action authorized by this clause is for the insurer to sue the responsible third party to recover the amount paid on the claim. It doesn’t involve suing the insured, nor does it authorize canceling the policy. Paying the claim is part of indemnification, while subrogation specifically relates to recouping costs from the third party at fault.

Subrogation lets the insurer step into the insured’s shoes after paying a claim and pursue recovery from the party at fault. The action authorized by this clause is for the insurer to sue the responsible third party to recover the amount paid on the claim. It doesn’t involve suing the insured, nor does it authorize canceling the policy. Paying the claim is part of indemnification, while subrogation specifically relates to recouping costs from the third party at fault.