WHY DO INSURERS INCLUDE A SUBROGATION CLAUSE IN THE POLICY WORDING?
A: Because it allows them to commence a recovery action at an earlier stage
B: Because it allows them to peruse a recovery in their own name
C: Because it prevents the insured from recovering twice for the same loss
D: Because subrogation rights to not arise automatically
A: At common law, the insurer must wait until it has paid a claim before it can exercise subrogation rights. However, because this delay might prejudice its chances of making a recovery, the insurer includes a clause in the policy that allows it to commence a recovery action before it has settled a claim.