Alberta General Insurance Level 1 Practice Exam

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When does subrogation proceedings initiate?

After a policy is cancelled
Once a claim is reported
After a 3rd party is identified as responsible
Before a claim is approved

The correct answer is: After a 3rd party is identified as responsible

Subrogation proceedings occur after a 3rd party is identified as responsible. This means that after an insurance company pays out a claim, they have the right to seek reimbursement from the responsible 3rd party. This would not happen after a policy is cancelled, as there would be no claim to seek reimbursement for. It also would not happen before a claim is approved as there would be no confirmation of a responsible 3rd party at that point. And while subrogation could occur after a claim is reported, it cannot fully initiate until a 3rd party is identified.