What does Subrogation ensure for an insured individual?

Subrogation is a crucial principle in insurance that ensures the insured individual is protected from having to pay for losses that are not their fault. When an insurance company pays a claim to the insured, it then has the right to pursue recovery from the responsible party. This process allows the insurer to recoup the costs they incurred when compensating the insured for their loss.

The significance of subrogation lies in its ability to maintain a balance in the insurance system. It prevents the insured from suffering financial losses out of their own pocket when another party is clearly at fault. By allowing the insurer to reclaim expenses, subrogation effectively keeps insurance premium costs in check, as insured individuals are not unfairly burdened by losses for which they were not responsible.

In contrast, coverage for all claims regardless of fault would imply that the insured could make claims without regard to the circumstances, which contradicts the fundamentals of risk assessment and management in insurance. Protection for losses caused by one’s own negligence does not apply here since subrogation is concerned with recovering costs from faulted parties. Lastly, delivery of damages when claims result in a court trial is more about the legal process than the essence of subrogation itself. Therefore, the focus on protecting the insured from