What is the process called when a claimant transfers their right to collect indemnity from a guilty party to their insurer?

What is the process called when a claimant transfers their right to collect indemnity from a guilty party to their insurer?

• A. Subrogation
• B. Assignment
• C. Waiver
• D. Concurrent Insurance

Answer: (A)

The correct answer is subrogation, which is a crucial process in the insurance realm. Subrogation occurs when an insurance company pays a claim to its insured and then assumes the insured's rights to pursue recovery from the party responsible for the loss. This helps insurance companies to mitigate their losses by seeking reimbursement from the liable party, ensuring that the costs of claims do not solely rest on the insurer. This process is not only beneficial for insurance companies but also serves to keep premiums in check for policyholders, as it allows insurers to recover some of the costs associated with claims made on behalf of insured individuals. By transferring the right to collect compensation from the party at fault, subrogation moves the financial burden from the insurer back to the negligent party. While the terms assignment, waiver, and concurrent insurance relate to insurance concepts, they describe different processes or policies. Assignment refers to the transfer of rights or benefits from one party to another but does not specifically involve an insurer recovering costs from a third party. Waiver involves relinquishing a known right or claim and does not imply any transfer of rights related to indemnity collection. Concurrent insurance refers to having more than one insurance policy covering the same risk or asset, which is unrelated to the transfer of rights

The correct answer is subrogation, which is a crucial process in the insurance realm. Subrogation occurs when an insurance company pays a claim to its insured and then assumes the insured's rights to pursue recovery from the party responsible for the loss. This helps insurance companies to mitigate their losses by seeking reimbursement from the liable party, ensuring that the costs of claims do not solely rest on the insurer.

This process is not only beneficial for insurance companies but also serves to keep premiums in check for policyholders, as it allows insurers to recover some of the costs associated with claims made on behalf of insured individuals. By transferring the right to collect compensation from the party at fault, subrogation moves the financial burden from the insurer back to the negligent party.

While the terms assignment, waiver, and concurrent insurance relate to insurance concepts, they describe different processes or policies. Assignment refers to the transfer of rights or benefits from one party to another but does not specifically involve an insurer recovering costs from a third party. Waiver involves relinquishing a known right or claim and does not imply any transfer of rights related to indemnity collection. Concurrent insurance refers to having more than one insurance policy covering the same risk or asset, which is unrelated to the transfer of rights