Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Health InsuranceMedium
A client is reviewing their medical expense insurance policy and sees a provision for 'Subrogation'. What does this clause allow the insurer to do?
- ARecover payments made to the insured from a third party responsible for the injury.
- BReduce benefits if the insured has coverage from multiple policies.
- CIncrease the policy premium if the insured files too many claims.
- DCancel the policy if the insured misrepresents material facts on the application.
Show answer & explanationAnswer & explanation
Correct answer: A. Recover payments made to the insured from a third party responsible for the injury.
Subrogation is a legal right that allows an insurer to recover the amount of a claim paid to an insured from a third party who caused the loss. This prevents the insured from being compensated twice for the same injury.
Why the other options are wrong
- B. This describes coordination of benefits, not subrogation.
- C. This relates to underwriting or policy renewal, not subrogation.
- D. This relates to contestability or rescission, not subrogation.
Subrogation
A legal right of an insurer to pursue a third party that caused an insurance loss to the insured. This is done to recover the amount of the claim paid by the insurer to the insured.
- Prevents double recovery by the insured.
- Insurer takes over rights of the insured.
- Common in health, auto, and property insurance.
Memory trick: Subrogation: Step Up and Get Back!