Which party benefits most directly from subrogation?

• A. The insured benefits most because they recover funds.
• B. The insurer benefits by recovering paid claims from the at-fault third party.
• C. The third party benefits by avoiding liability.
• D. The government benefits by collecting taxes.

Answer: (B)

Subrogation lets the insurer recover the amount paid to the insured from the party at fault. After the insurer pays a claim, it steps into the insured’s position and pursues reimbursement from the responsible third party. This direct recovery reduces the insurer’s net loss and helps keep insurance costs reasonable for everyone. The insured may benefit indirectly if such recovery prevents out-of-pocket expenses, but the immediate, direct beneficiary is the insurer. The third party isn’t helped by avoiding liability, and government taxes aren’t involved in this process.