Which term means the right to recover from one legally liable?

• A. Subrogation
• B. Peril
• C. Indemnify
• D. Builder's Risk

Answer: (A)

Subrogation is the mechanism where, after an insurer pays a loss to the insured, the insurer takes over the insured’s legal right to recover those costs from the party responsible for the damage. This keeps the at-fault party ultimately bearing the loss and helps prevent the insured from collecting twice. For example, if a builder’s project is damaged due to a subcontractor’s fault and the insurer pays the claim, the insurer can pursue reimbursement from the subcontractor or their insurer. Peril is the cause of the loss (like fire or flood). Builder’s Risk refers to a policy covering a building under construction. Indemnify means to compensate or reimburse for loss, but does not describe the transfer of recovery rights. The term that expresses the right to recover from the legally liable party is subrogation.