What is "insurance subrogation"?

Insurance subrogation is fundamentally the right of an insurer to seek recovery from a third party that is responsible for a loss after the insurer has paid a claim to its insured. This legal principle allows the insurer to step into the shoes of the insured and pursue any necessary legal action against the responsible party, effectively seeking reimbursement for the amounts it has already disbursed.

When an insured suffers a loss due to another party's negligence or wrongful act, the insured may file a claim with their insurance company. Once the insurer compensates the insured for the loss, subrogation allows the insurer to claim back these costs from the party that caused the damage. This mechanism not only helps to mitigate the financial impact on the insurer but also serves to hold the responsible party accountable.

The other options provided are not reflective of subrogation. The obligation to cover medical expenses pertains to the terms of the insurance policy, while selling insurance policies involves marketing and distribution processes, and increasing premiums is a separate actuarial function tied to the insurer's risk assessment and underwriting practices. None of these accurately describe the core concept of insurance subrogation, which is primarily about recovery and accountability after claims have been paid.