When is subrogation typically pursued after paying a claim?

• A. After paying a claim, the insurer may pursue subrogation against a responsible third party; the insured cooperation is usually required.
• B. Subrogation can occur before any claim is paid.
• C. Subrogation requires the insured to hire their own attorney.
• D. Subrogation is not available when the insured sues the third party.

Answer: (A)

Subrogation arises when the insurer has indemnified the insured for a loss. Once payment is made to or on behalf of the insured, the insurer can step into the insured’s shoes and pursue recovery from the third party responsible, to recoup the amount paid. This arrangement prevents the insured from being compensated twice and helps keep premiums from rising due to losses.

Cooperation from the insured is usually required because the insurer often needs access to records, statements, and sometimes an assignment of rights or a subrogation agreement to preserve recovery. If the insured settles with the at-fault party or withholds information, it can jeopardize the insurer’s ability to recover.

Subrogation isn’t typically pursued before any payment is made, and while the insured can hire their own attorney if they choose, that isn’t a required step for subrogation to occur. The insured’s own lawsuit against the third party doesn’t prevent the insurer’s subrogation rights; both can be pursued in coordination under the policy terms.