Minnesota Real Estate Exam Practice Question
An insurer often pays an insured party for a loss and takes over the insured's right to collect from any other person that may be responsible for causing the loss. The provision in the policy that allows this action by the insurer is called the
Correct Answer: B
Rationale: The subrogation clause enables an insurer to step into the shoes of the insured after compensating for a loss, allowing the insurer to pursue recovery from third parties responsible for the damage. This mechanism helps prevent the insured from receiving double compensation.
Option A, the assignment clause, pertains to transferring policy rights but does not involve recovery from third parties. Option C, the other insurance clause, addresses situations where multiple policies cover the same loss, rather than recovery rights. Option D, the loss payee clause, specifies who receives payment in the event of a loss but does not relate to the insurer’s rights to pursue third-party claims.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now