What right does an insurer gain after indemnifying a policyholder and pursuing payment from a third party?

When an insurer indemnifies a policyholder for a covered loss, it compensates the policyholder for their damages according to the terms of the insurance policy. After this compensation has been made, the insurer gains the right to pursue recovery from any third party that may be responsible for the loss. This process is known as subrogation.

Subrogation allows the insurer to step into the shoes of the insured and seek reimbursement from those who are liable for the damages. This ensures that the insurer can recover the amount it paid out to the policyholder, thus maintaining the principles of indemnity and preventing the insured from receiving a double recovery for the same loss.

In contrast, collateral recovery refers to securing additional assurance for a loan or obligation, and reimbursement involves paying back someone who has already incurred expenses that are eligible for compensation. Indemnity pertains to the compensation itself for losses experienced by the policyholder. Subrogation specifically addresses the insurer's right to pursue recovery from third parties after payment has been made to the insured.