In: Operations Management
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 allows the insurance company to sue individuals receiving medical coverage (coverage F) due to their own negligence.
The subrogation clause warrants that Angela will return the claim payment if the insurance company later determines that she negligently caused the loss.
The subrogation clause assigns Angela's rights in the action for the loss to the insurance company.
The insurance company is entitled to keep any and all damages collected from litigation pursuant to the subrogation clause.
Answer : The subrogation clause assigns Angela's rights in the action for the loss to the insurance company.
Note : Subrogation clause is added to the document so that the insurance company if finds the person due to whom damages were caused can sue that person as they have already paid the damages to Angela, while this clause does not apply to coverage F or it doesn't demand the paid claim from the insured person.