Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance

In insurance, the principle of 'subrogation' allows the insurer, after paying a valid indemnity claim, to do which of the following?

Subrogation lets the insurer, after settling an indemnity claim, take over the insured's rights and recover the loss from the negligent third party responsible. This prevents the insured from profiting twice for the same loss, and it applies to indemnity contracts rather than to life insurance.

  1. AStep into the insured's shoes and recover the loss from a negligent third partyCorrect
  2. BCancel the policy and refund the entire premium to the insured
  3. CIncrease the sum insured without any further underwriting
  4. DTransfer the claim liability to the insured's nominee

Explanation

Subrogation applies to contracts of indemnity. Once the insurer pays the loss, it acquires the insured's rights against the third party who caused the loss, so that the insured does not gain from both the insurer and the wrongdoer. The other options describe actions unrelated to this principle.

Did you get it right without looking?

One question tells you little. A timed set on Basics of Insurance shows your real accuracy, how long you take and where you lose marks.

Practise Basics of InsuranceFree diagnostic mock

More Basics of Insurance questions