What is the legal process called when an insurer seeks recovery from a third party after indemnifying the insured?

The legal process by which an insurer seeks recovery from a third party after indemnifying the insured is known as subrogation. This process is essential in the insurance industry as it allows the insurer to step into the shoes of the insured after they have paid a claim. Once the insurer compensates the policyholder for their loss, it gains the right to pursue any legal claims against the party responsible for that loss.

Subrogation helps prevent the insured from receiving payment from both the insurer and the liable third party for the same loss, which would be unjust enrichment. This process also allows insurers to recoup costs and control premiums by seeking recovery from those at fault, thus maintaining the viability of the insurance system.

The other options do not accurately describe this legal process. Reimbursement typically refers to the act of paying someone back for out-of-pocket expenses, which does not encapsulate the broader legal implications of subrogation. Deductible recovery is not a recognized legal term in this context and generally pertains to the amount that an insured must pay out-of-pocket before insurance kicks in. Indemnification refers to the act of compensating the insured for losses, not the act of seeking recovery from third parties.