In property insurance terms, what does subrogation refer to?

Subrogation is a key principle in property insurance that allows the insurer to step into the shoes of the insured after a loss has occurred. This means that once an insurance company pays out a claim to the insured for damages, it gains the right to seek reimbursement from any third party that may have been responsible for the loss. In this way, subrogation helps to prevent the insured from receiving a double recovery for the same loss—once from their insurance coverage and potentially again from the party at fault. It serves as a mechanism through which insurers can recover costs, thereby helping to keep premiums more affordable for policyholders.

The other choices refer to processes and evaluations relevant to the management of property insurance but do not accurately describe the concept of subrogation. For instance, estimating property damage is part of the claim adjustment process, while coverage determination involves evaluating a property to see if it meets the criteria for insurance coverage. The review of policy exclusions deals with what is not covered by the policy. None of these concepts directly relate to the insurer's right to pursue action against a third party, which is the essence of subrogation.