Arizona Adjuster Practice Exam

Subrogation rights are typically exercised by which party?

1. Insured

2. Insurer

3. Claimant

4. Third-party adjuster

The correct answer is: Insurer

Subrogation rights are primarily exercised by the insurer. This legal concept allows the insurer to assume the rights of the insured to pursue recovery from a third party that caused a loss after the insurer has compensated the policyholder for that loss. By exercising subrogation rights, the insurer can seek reimbursement for the claims paid out on behalf of the insured, thereby helping to mitigate their overall losses. When a claim is made, the insurer steps in to pay for the damages or losses incurred by the insured, but as part of this process, they may also identify whether a third party is liable for the incident. Once the insurer pays the claim, they can then pursue the responsible third party to recover the funds disbursed to the insured. This process not only benefits the insurer by recouping losses but also helps keep insurance premiums lower for all policyholders by reducing the insurer's overall costs. The insured may have some involvement in the subrogation process, particularly by providing evidence or testifying, but it is fundamentally the insurer that executes these rights on behalf of the insured. This concept reinforces the insurer's role in the claims process and emphasizes the collaborative nature of risk management between insurers and policyholders.