What is subrogation in a CGL policy?

• A. The insurer's right to pursue recovery from a third party responsible for a loss after paying a claim.
• B. The insured's right to sue the insurer for coverage disputes.
• C. The insurer's right to cancel the policy after a claim.
• D. The insured's duty to mitigate damages after a loss.

Answer: (A)

Subrogation in a CGL policy means that after the insurer pays a claim to or on behalf of the insured, the insurer steps into the insured’s shoes to pursue recovery from the third party responsible for causing the loss. The purpose is to recoup the amount paid and to prevent the insured from collecting twice for the same damage, which helps keep insurance affordable for everyone. The insured usually must cooperate with the insurer’s subrogation efforts and should not settle with the at-fault party without the insurer’s consent. If money is recovered from the responsible party, the insurer is entitled to the recovery up to the amount it paid (often with the deductible considered), with any excess typically returning to the insured. Subrogation does not involve the insured suing the insurer, nor is it about policy cancellation or the insured’s duty to mitigate—those are separate concepts.