When the insurer pays for repair costs caused by vandalism, what right can they exercise to recoup costs?

Subrogation rights play a vital role in the insurance process, especially when it comes to recovering costs associated with damages that the insurer has already compensated the insured for. When an insurer pays for repair costs due to vandalism, they typically have the right to pursue recovery from the responsible party. This process is known as subrogation.

Subrogation allows the insurer to "step into the shoes" of the insured and bring a claim against any third party that caused the loss. This right ensures that the insurer doesn't bear the full burden of the loss when another party is liable for it. If the insurer successfully recovers costs from the responsible party, this can help to reduce overall claims costs and ensure that the claims process remains sustainable.

In contrast, the other options presented do not relate directly to the recovery of costs from a third party after payment has been made for a loss. For example, the arbitration clause refers to a method of resolving disputes, while the average clause deals with underinsurance and the consequences thereof. The contribution condition typically relates to situations where multiple policies cover the same loss. Each of these concepts serves different purposes in insurance contracts and does not pertain to the insurer's ability to recoup costs after indemnifying an insured for vandalism