The rights to recover payment made to the insured from the negligent party are called?

• A. Indemnity
• B. Reinsurance
• C. Salvage
• D. Subrogation

Answer: (D)

Subrogation is the insurer’s right to step into the insured’s position after paying a claim and pursue reimbursement from the party responsible for the loss. This lets the insurer recoup the benefits paid to the insured from the negligent party and prevents the insured from collecting more than once for the same loss. For example, after the insurer pays medical expenses following a car accident, it can sue the at-fault driver (or their insurer) to recover those costs. The other terms don’t fit: indemnity is the broad idea of restoring the insured to their financial position, not the specific right to recover from a third party; reinsurance is risk transfer between insurers; salvage is about recovering value from damaged property, not pursuing the responsible party for reimbursement.