Florida Insurance Licensing Practice Exam

Which of the following is TRUE concerning Subrogation?

1. Transfers the insured's rights to the insurer

2. Allows insurer to sue a negligent third party to recover a loss paid to an insured

3. Prevents an insurer from recovering a paid loss

4. Allows the insured to double-dip on claim payments

The correct answer is: Allows insurer to sue a negligent third party to recover a loss paid to an insured

Subrogation allows the insurer to sue a negligent third party to recover a loss paid to an insured, which means that they can seek reimbursement for the money they paid out on a claim. Option A is incorrect because subrogation transfers the rights of the insurer, not the insured's. Option C is incorrect because it is the opposite of what subrogation allows. Option D is incorrect because subrogation prevents double-dipping on claim payments, ensuring that the insured does not profit from the same loss from both the insurer and the negligent third party.