What term describes the transfer of the insured's right to seek damages from a liable third party to the insurance company?

The term that describes the transfer of the insured's right to seek damages from a liable third party to the insurance company is subrogation. This process allows the insurance company to step into the shoes of the insured after paying a claim, enabling the insurer to pursue recovery from the responsible party.

Subrogation is crucial in maintaining the principle that the insured should not profit from insurance; instead, it ensures that the insurance company can recoup some of its costs associated with the claim. By exercising subrogation rights, the insurer can minimize its losses and can potentially reduce future premiums for policyholders as a result.

Understanding subrogation is particularly important for customer representatives, as it impacts the handling of claims and the dynamics between insurers and insured parties. It highlights the cooperative relationship between the insured and the insurer in pursuing justice and financial recovery following a loss.