What term describes the transfer of a party's legal claim against a third party to its insurance carrier?

What term describes the transfer of a party's legal claim against a third party to its insurance carrier?

• A. Assignment
• B. Mediation
• C. Claims management
• D. Declaratory judgment

Answer: (A)

Assignment is the term for transferring the legal claim against a third party to the insurance carrier. In practice, when a loss occurs and a liability claim is involved, the insured may assign the right to sue the third party to the insurer. The insurer then steps into the claimant’s position to pursue recovery for amounts paid on the claim and may later use subrogation to recover costs from the at-fault party or their insurer. This is different from mediation, which is a process to negotiate a settlement; from claims management, which is the insurer’s overall handling of the claim; and from a declaratory judgment, which is a court ruling about rights rather than a transfer of the claim.

Assignment is the term for transferring the legal claim against a third party to the insurance carrier. In practice, when a loss occurs and a liability claim is involved, the insured may assign the right to sue the third party to the insurer. The insurer then steps into the claimant’s position to pursue recovery for amounts paid on the claim and may later use subrogation to recover costs from the at-fault party or their insurer. This is different from mediation, which is a process to negotiate a settlement; from claims management, which is the insurer’s overall handling of the claim; and from a declaratory judgment, which is a court ruling about rights rather than a transfer of the claim.