Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Health InsuranceHard
A Florida resident is reviewing their individual health insurance policy and sees a provision for 'Subrogation'. What does the subrogation provision allow the insurer to do?
- ACancel the policy if the insured develops a pre-existing condition.
- BLimit the types of medical providers the insured can use.
- CRecover payments made for an injury if a third party is legally responsible.
- DIncrease premiums based on the insured's claims history.
Show answer & explanationAnswer & explanation
Correct answer: C. Recover payments made for an injury if a third party is legally responsible.
Subrogation is a legal right that allows an insurer to pursue a third party that caused a loss to the insured. If the insurer pays for the insured's medical expenses due to an injury caused by another party, the insurer can then seek reimbursement from that responsible third party.
Why the other options are wrong
- A. This relates to pre-existing conditions or underwriting, not subrogation.
- B. This relates to network restrictions (e.g., HMO, PPO), not subrogation.
- D. This relates to experience rating or underwriting, not subrogation.
Subrogation Provision
A provision in an insurance policy that grants the insurer the right to pursue a third party responsible for an insured's loss, to recover the amount of the claim paid to the insured.
- Transfers the insured's right to sue to the insurer.
- Prevents the insured from collecting twice (from insurer and third party).
- Common in health, auto, and property insurance.
- Helps reduce insurance costs by recovering payouts.
Memory trick: Subrogation: The insurer stands in your shoes to get their money back from the one who broke the rules.