When the insured transfers his/her rights to collect for damages to the insurer, it is known as?

• A. Subrogation
• B. Assignment
• C. Waiver
• D. Settlement

Answer: (A)

Subrogation is when the insurer, after paying a claim to the insured, steps into the insured’s position to pursue recovery from the party responsible for the loss. The scenario described—the insured transferring the right to collect damages to the insurer—is exactly how subrogation works. It allows the insurer to be reimbursed for the claim payment by the at-fault party, and it helps prevent the insured from collecting twice and keeps premiums fair for everyone.

This is different from assignment, which would permanently transfer the insured’s claim rights to someone else, from waiver, which means giving up a right, or from settlement, which is simply resolving the claim. In subrogation, the insured retains overall protection, but the insurer gains the right to recover from the third party after indemnifying the insured. Any recovered funds typically go first to reimburse the insurer for the amount paid, with any remaining balance, if applicable, potentially returning to the insured depending on policy terms.