What legal process allows an insurer to recover losses from a third party?

Subrogation is the legal process that allows an insurer to recover losses from a third party who is either partially or fully responsible for the damage or loss. This process entails the insurer stepping into the shoes of the insured after a claim has been paid out. Essentially, the insurer has the right to pursue any claims against the third party to recoup the costs incurred from the claim they paid.

For instance, if you are in a car accident caused by another driver and your insurance pays for your damages, after settling your claim, your insurance company may seek to recover their costs from the at-fault driver or their insurance. This not only helps insurance companies manage their costs but also keeps insurance premiums in check for policyholders.

In contrast, arbitration and mediation are both forms of alternative dispute resolution that involve neutral third-party facilitators to help reach a settlement, but they do not specifically refer to the process of recovering costs from another party. Restitution generally refers to the act of returning something to its rightful owner or compensating for loss or damage, but it does not represent the specific legal right insurers have to take action against responsible third parties after compensation has been paid.