What does an insurer achieve by exercising their right of subrogation?

When an insurer exercises their right of subrogation, they aim to recover costs from a third party who is responsible for the loss incurred by the insured. This right allows the insurer to step into the shoes of the insured after they have paid a claim. By pursuing a third party, the insurer seeks to reclaim all or part of the claim amount, effectively minimizing its financial loss.

Subrogation is a fundamental principle in insurance that helps keep premiums lower for policyholders, as it allows insurers to recoup losses from those at fault. The process involves the insurer taking legal action against the third party that caused the loss, emphasizing the importance of identifying liability in an insurance claim. This right is often outlined in the insurance policy and is an essential mechanism in maintaining fairness within the insurance system.

In contrast to the other options, only the recovery from a third party accurately reflects what subrogation achieves, while the other choices deal with aspects like sharing losses, inter-insurer contributions, or depreciation – which do not directly pertain to the subrogation process.