What is the insurance practice called when an insurer assumes the rights of an insured against a third party?

The practice where an insurer assumes the rights of an insured against a third party is known as subrogation. This process typically occurs when an insurance company pays a claim to its insured for damages or losses they have incurred, and subsequently seeks to recover those costs from the party responsible for the damages.

Subrogation is crucial because it helps insurers minimize their losses and prevents the insured from being compensated twice for the same claim—once by their own insurer and potentially again by the responsible party. This mechanism promotes accountability and ensures that the party at fault ultimately bears the financial responsibility for their actions.

Other concepts such as underwriting, exclusion, and reinsurance do not pertain to this practice. Underwriting involves assessing risks and determining premiums, exclusion refers to specific types of coverage that are not included in an insurance policy, and reinsurance involves one insurance company insuring another to spread risk. These functions play important roles in the insurance industry, but they do not directly relate to the transfer of rights following a loss, as subrogation does.