Ace California Life & Health Insurance Exam 2025 – Burst Into Your Bright Insurance Future!

Question: 1 / 400

In insurance, what does "subrogation" mean?

The evaluation process of policy claims

The recovery process from a third party after paying a claim

Subrogation refers to the process through which an insurance company can recover costs from a third party who is responsible for a loss after it has paid a claim to the insured. When an insurance policyholder files a claim and receives compensation for a loss, the insurance company often has the right to pursue recovery from any responsible third parties. This allows the insurer to regain some or all of the money it disbursed for the claim.

For instance, if a person is in a car accident caused by another driver and their insurance pays for the repairs, that insurer can seek compensation from the at-fault driver's insurance. This practice helps keep insurance costs down by enabling the insurance company to recover funds when appropriate. Understanding subrogation is important as it illustrates the relationship between insurers, insureds, and third parties in the realm of risk management and insurance claims.

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The method for updating policyholder information

The process of canceling an insurance policy

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