Canadian Accredited Insurance Broker (CAIB) One Practice Exam

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Prepare for the Canadian Accredited Insurance Broker Exam. Review key concepts with practice questions and detailed explanations. Enhance your understanding and readiness for the CAIB One Exam today!

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What is the right called that allows an insurer to recover from the at-fault party after indemnifying the insured?

  1. The right of restitution

  2. The right of indemnity

  3. The right of subrogation

  4. The right of recovery

The correct answer is: The right of subrogation

The correct answer is the right of subrogation. This legal principle allows an insurer to step into the shoes of the insured after an indemnification event, meaning that once the insurer has paid for the loss or damage to the insured party, they gain the right to pursue a claim against the at-fault party. Subrogation is a crucial mechanism in the insurance industry because it helps insurers recoup their costs by holding the party responsible for the damage liable for the payments made to the insured. This process ultimately helps keep insurance premiums lower, as it allows insurers to recover some of their expenses. Understanding subrogation is essential, as it highlights how insurance companies manage risk and financial liability after they fulfill their coverage commitments.