Question

Angela suffered a loss to her home caused by a covered peril in her HO policy, and has agreed with her insurance company about the amount of damages. Before the company will give her a check, however, they ask her to sign an agreement with a subrogation clause. Which of the following statements concerning subrogation is correct?

The subrogation clause warrants that Angela will return the claim payment if the insurance company later determines that she negligently caused the loss.

The insurance company is entitled to keep any and all damages collected from litigation pursuant to the subrogation clause.

The subrogation clause assigns Angela’s rights in the action for the loss to the insurance company.

The subrogation clause allows the insurance company to sue individuals receiving medical coverage (coverage F) due to their own negligence.

Answer 1

The Subrogation clause mandates the right held by most insurance companies to legally pursue a third party that caused an insurance loss to the insured. This is done to recover the amount of the claim paid by the insurance company to the insured for the loss.

Here, option, The subrogation clause assigns Angela’s rights in the action for the loss to the insurance company, is correct.

As the insurance company can sue a third party for the claim amount paid to Angela.

Its the right to sue which is being transferred to the Insurance Company.