What does the term 'subrogation' mean in property insurance?

Subrogation is an important concept in property insurance that allows the insurer to seek recovery from a third party that may have caused a loss after compensating the policyholder. When an insurer pays a claim to the policyholder for a covered loss, subrogation gives the insurer the legal right to step into the shoes of the insured and pursue a claim against the responsible third party for reimbursement of the amount paid out. This process helps keep insurance premiums in check, as it allows insurers to recover losses and avoid higher costs for all policyholders.

The other options do not accurately represent the meaning of subrogation. Denying a claim is a separate process related to the terms of the policy and does not align with the recovery aspect of subrogation. The insurer's responsibility to cover all losses pertains more to the obligations defined in the insurance policy terms but does not describe subrogation. Adjusting claims relates to the evaluation and settlement process of claims, distinct from the legal pursuit of recovery after claims have been paid. Therefore, option C precisely captures the essence of what subrogation entails in the context of property insurance.