Directions: Choose the correct option for the given question.

Under which principle, all the rights of an insured are transferred to insurance company after making payment of claim?

The principle of subrogation allows an insurance company to step into the insured's shoes after paying a claim. This means the insurer acquires all legal rights the insured had against third parties responsible for the loss, and can recover costs from them. For example, if your car is damaged by another driver and your insurer pays you, they can then pursue the at-fault driver for reimbursement.