What is a "subrogation" process?

The subrogation process is fundamentally the right of an insurance company to pursue recovery from a third party that is deemed responsible for a loss for which the insurer has already compensated the insured. In essence, when an insurance company pays for a loss that was caused by another party—for instance, in an auto accident where another driver was at fault—the insurer has the legal right to seek reimbursement from that at-fault party or their insurance provider. This process helps insurance companies reduce their overall losses and can lead to lower premiums for policyholders over time.

In the context of the other options, they do not accurately depict the definition of subrogation. Issuing duplicate policies does not relate to the recovery of funds; canceling an insurance policy pertains to ending coverage rather than pursuing liability; and negotiation between insurer and insured typically involves settling claims or adjusting policies but does not directly refer to the recovery from third parties. Therefore, the correct understanding of subrogation lies in its role as an avenue for insurers to recoup costs from at-fault parties following a loss.