Which action represents subrogation in insurance claims?

Subrogation is a fundamental principle in insurance that allows an insurer who has paid a loss to recover the amount paid from a third party that is responsible for that loss. This process ensures that the insured party is ultimately compensated without being unjustly enriched at the expense of the insurer.

When an insurer pays a claim to the insured, it assumes the insured’s right to pursue any third party that may have caused the loss. By suing that third party, the insurer seeks to recover the costs associated with the claim. This action protects the insurer against future impacts of similar losses and helps keep insurance premiums more affordable by ensuring that the liable party ultimately bears the financial responsibility.

In contrast, settling a claim directly with the insured does not involve recovering costs from third parties and does not embody the concept of subrogation. Transferring liability back to the insured would negate the purpose of coverage provided by the insurer, and limiting liability to only future events does not relate to how subrogation functions in the context of claims processing. Thus, the action representing subrogation is accurately described by the insurer suing a third party after paying the insured's loss.