Which policy grants the title company the right of subrogation when paying a claim?

• A. Subrogation
• B. Title insurance
• C. Mortgagees/lender's policy
• D. Standard coverage

Answer: (A)

Subrogation is the mechanism at work here. When the title insurer pays a covered claim, it steps into the insured’s shoes and gains the right to pursue recovery from the party responsible for the title issue. This transfer of rights allows the insurer to recoup some or all of the amount paid by going after the negligent or liable party, and it helps keep premiums from rising due to losses. The title policy itself provides protection against title defects, but subrogation rights come from the insurer’s ability to claim those rights after payment. A mortgagees/lender’s policy is simply a policy the lender holds, and standard coverage refers to the level of protection within a title policy; neither specifically grants the subrogation right in the sense of recovering paid losses from third parties.