In the context of insurance, what does subrogation help recover?

Subrogation is a crucial principle in the context of insurance that allows an insurance company to seek recovery of costs from the party that is responsible for a loss or damage after it has compensated the insured. When an insurer pays for a loss, it essentially steps into the shoes of the insured to claim reimbursement from any third party that may have caused the loss.

By pursuing subrogation, the insurer can recover damages from the liable party, which not only helps mitigate the insurer's own losses but can also keep policy premiums more stable. This process fosters accountability among those who are responsible for causing damages or injuries, reinforcing the idea that the party at fault should bear the financial burden of their actions.

In this context, the other options do not accurately reflect the function of subrogation. Debt obligations involve unpaid debts and financial responsibilities that have nothing to do with insurance claims. Moral hazards refer to the risk that a party may act less responsibly because they know they have insurance coverage. Policy premiums are the costs paid by the insured to maintain their insurance coverage and are not recoverable through subrogation. Thus, the correct answer focuses on the recovery of damages from the party liable for causing those damages, which is the essence of subrogation in insurance