Final answer:
The process of an insurer recovering funds after paying a claim is known as subrogation. Insurance involves policyholders paying premiums to an insurer, which promises to cover financial losses from certain events. Coinsurance requires policyholders to pay a portion of the loss while the insurer pays the remainder.
Step-by-step explanation:
The process by which an insurer seeks recovery of funds after paying out a claim is known as subrogation. It occurs when an insurance company has paid its insured for a loss and then pursues a third party that may have caused the loss to recover the funds. Insurance is a method of protecting individuals or entities against financial loss, in which policyholders make regular payments, called premiums, to an insurance company. In turn, the insurance company is committed to compensating the insured for significant financial damage resulting from a covered event.
In addition to regular insurance plans, there are other forms such as coinsurance, where the policyholder pays a percentage of a loss and the insurance company covers the remaining cost. Coinsurance is a common feature in health insurance policies. Important terms associated with insurance include moral hazard, which describes how an individual's behavior might change as a result of having insurance, particularly by becoming less careful about preventing the insured against events, since the financial consequences are partly borne by the insurer.
Government and social insurance programs also exist and operate similarly to private insurance in some aspects. Members make steady payments into a fund from which those who suffer an adverse event can receive compensation. However, not all government programs have an explicit fund set up for this purpose.