What is subrogation in insurance claims?

Subrogation in insurance claims refers specifically to the process whereby an insurer, after paying a claim to its policyholder for a loss, seeks reimbursement from a third party that is responsible for that loss. This means that if another party's negligence or actions caused the damage, the insurer will pursue recovery of the amounts paid out to the insured from that third party. This process helps to prevent the insured from receiving a double recovery for the same loss and allows insurers to mitigate their losses, ultimately keeping premiums lower for policyholders.

The other options describe different aspects of insurance and dispute resolution but do not accurately define subrogation. Dispute resolution between insurers and policyholders, while important, is a different process that does not pertain to seeking reimbursement. Calculating insurance premiums is a separate function related to assessing risk, not to the pursuit of claims. Similarly, negotiations between the policyholder and insurer involve discussions regarding claims and coverage but do not encompass the specific legal and financial recovery aspect characterized by subrogation.