Final answer:
In a standard Personal Automobile policy, insurance companies have subrogation rights to recover losses from responsible parties but usually exclude coverage for medical payments or Personal Injury Protection. These policies are designed to pay out when medical expenses arise, upon policyholder's death, or when cars or dwellings suffer damages. These principles are governed by the fundamental law of insurance, balancing payouts with the premiums collected.
Step-by-step explanation:
The standard Personal Automobile policy provisions grant the insurance company subrogation rights against any person who is permitted to use a covered auto. Subrogation rights allow insurers to recover costs from the responsible parties in the event of a loss. However, these rights do not extend to every coverage. The insurance company typically cannot exercise subrogation against persons permitted to use the covered auto under the coverage for medical payments, or Personal Injury Protection (PIP) in states that have it, as these are designed to be paid regardless of fault.
It is important to understand how these policies function. Insurance pays out when medical expenses are incurred, the policyholder dies, a car is damaged, stolen, or causes damage to others, or when a dwelling is damaged or burglarized. The fundamental law of insurance is that the average amount individuals receive cannot exceed the average amount paid in premiums. Regardless of the regulations set by state insurance regulators to keep premiums low, this principle must be adhered to ensure the viability and sustainability of insurance providers.