What process transfers an insured's legal right of recovery to the insurer that paid a claim?

Subrogation is the correct term for the process that enables an insurer to step into the shoes of the insured after paying a claim, allowing the insurer to pursue recovery from the party responsible for the loss. When an insured suffers a loss and their insurer compensates them, the insurer gains the legal rights of recovery that the insured had against any responsible third party. This means that if the insured could have sought compensation from another party (for example, in cases of negligence or wrongful acts), the insurer now has the authority to do so on their behalf.

This process is foundational in insurance because it helps to prevent the insured from being compensated twice for the same loss, while also allowing insurers to recover some or all of the payout costs. This recovery mechanism is beneficial, as it ultimately helps in keeping premiums lower for all policyholders by allowing insurers to recoup costs associated with claims.

The other processes mentioned, such as assignment, indemnity, and exclusivity, do not pertain to the legal right of recovery in the same way. Assignment typically involves transferring the rights or benefits of an insurance policy to another party. Indemnity refers to the principle that insurance will restore the insured to the financial position they were in prior to the loss, meaning they should