What does subrogation allow an insurer to do?

Subrogation is a legal principle that enables an insurer to step into the shoes of the insured after a loss has occurred. This process allows the insurer to seek reimbursement from third parties who are responsible for the loss. When the insurer pays a claim to the insured, subrogation provides the insurer with the right to pursue recovery of that amount from those who may have caused the damage or loss.

In the context of insurance, this mechanism helps to ensure that the party who is ultimately responsible for the loss bears the financial burden rather than the insurer or the insured. For example, if an insured person is involved in a car accident caused by another driver's negligence, after compensating the insured for their damages, the insurer can utilize subrogation to recover those costs from the at-fault driver or their insurance company.

This principle is vital as it helps control premiums and prevents the insured from profiting from insurance claims, while also holding third parties accountable for their actions. The other choices mentioned, such as transferring liability to the insured, waiving premiums, or dismissing fraudulent claims, do not accurately reflect the purpose or function of subrogation within the insurance framework.