Arizona Adjuster Practice Exam

What process does Atlas use to recover payments from a liable party?

1. Litigation

2. Subrogation

3. Mediation

4. Reimbursement

The correct answer is: Subrogation

Subrogation is the process used by insurance companies to recover payments made on behalf of their policyholders from a liable third party. When an insurer pays a claim to their insured individual, they may seek to recover that amount from the party that was responsible for the loss or damage. This recovery is essential for the insurer to maintain financial stability and helps keep insurance premiums lower for all policyholders. In the context of Atlas, subrogation would allow the company to step into the shoes of its insured and pursue the responsible party to recover the funds they have already disbursed. This process typically involves negotiating with the liable party or their insurance provider and may ultimately lead to legal action if a resolution cannot be reached amicably. The other options, while related to dispute resolution and financial recovery, do not specifically pertain to the process of an insurer recovering funds from another party in the context of insurance claims. Litigation refers to taking legal action to resolve a dispute, mediation involves a neutral third party to facilitate resolution, and reimbursement generally involves a party repaying the insurer for costs incurred, which is not the same as subrogation.