Question

Melody's car was damaged when another driver ran a stop sign and hit her car. Melody decided to collect from her own insurer and to let her insurer recoup the loss payment from the negligent driver who hit her. What fundamental legal principle is illustrated in this scenario?
A) the principle of utmost good faith
B) the principle of insurable interest
C) the principle of subrogation
D) the principle of reasonable expectations

Answer 1

Answer:

C) the principle of subrogation

Explanation:

Principle of subrogation says that when the insured makes a claim on damage by a third party, the insurance company pays the insured and then recoup from the third party.

Basically the insurance company is taking over the legal right from Melody to get settlement from the negligent driver.

The insurance company will get the loss payment now directly from the negligent driver.