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Question

What is the principle of subrogation in insurance? 

A The insured must have a financial or other interest in the subject matter of the insurance policy Correct Answer Incorrect Answer
B The insurer should compensate the insured for the actual financial loss suffered due to an unforeseen event or peril Correct Answer Incorrect Answer
C If the insurer pays for the loss, they should have the right to take over the insured's rights against third parties that caused the loss Correct Answer Incorrect Answer
D Only the loss caused by the peril covered in the insurance policy will be compensated Correct Answer Incorrect Answer

Solution

Explanation: The principle of subrogation in insurance refers to the right of an insurer to step into the shoes of its insured and seek recovery or reimbursement from a third party who is responsible for causing the loss or damage. When an insurer pays a claim to its insured, it essentially acquires the rights of the insured against the responsible party.

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