What does "subrogation" refer to in property insurance?

Subrogation in property insurance refers to the process where an insurer, after compensating the policyholder for a loss, seeks reimbursement from a third party that is responsible for that loss. This concept is crucial because it helps the insurer recover costs and keeps insurance premiums lower for policyholders. When the insurer pays out a claim to the insured, it gains the right to pursue any legal action against the party at fault, which can include individuals or businesses that caused the damage that led to the claim.

This process ensures that the insured does not receive a double recovery by claiming both from their insurance and the responsible party, upholding the principle of indemnity within insurance. It also motivates policyholders to provide accurate information regarding incidents to facilitate the recovery process for insurers.

The other options don't accurately capture the essence of subrogation. For instance, the process of claiming insurance after a loss is more about filing a claim, estimating property value pertains to determining the worth of an asset for coverage purposes, and legal claims filed by policyholders do not directly relate to the insurer's right to recover costs from a third party after compensation has been paid.