Which term refers to an insurer's right to pursue a third party after a loss?

The term that refers to an insurer's right to pursue a third party after a loss is subrogation. This process occurs after an insurance company pays a claim to the insured for a covered loss. At this point, the insurer can step into the shoes of the insured and seek recovery from the third party that caused the loss. This is essential as it allows the insurance company to regain some of the funds it disbursed, thereby helping to keep insurance costs lower for everyone.

Subrogation not only protects the interests of the insurer but also serves to hold the responsible party accountable for their actions. For instance, if a driver causes an accident and the injured party's insurance pays for the damages, that insurance company can later pursue the at-fault driver's insurance for reimbursement. This mechanism helps ensure that the financial burden falls on the responsible party rather than on the insurance provider or the policyholder.