What provision allows Trudy's insurer to recover costs from Harry after paying for her car damage?

The concept of subrogation in insurance allows an insurer to step into the shoes of the insured after settling a claim and pursue recovery from a third party responsible for the loss. In this scenario, after Trudy's insurer compensates her for the damages to her car caused by Harry, the insurer has the right to seek reimbursement from Harry. This process is beneficial to insurers because it helps them recover some of the costs incurred while covering their policyholder’s losses.

Subrogation is a standard provision in insurance policies aimed at ensuring that the financial burden of repair or replacement does not ultimately fall on the insurer more than necessary when another party is at fault. This not only helps to keep insurance premiums lower but also ensures that individuals responsible for damages are held financially accountable for their actions.

Understanding subrogation is crucial for policyholders, as it clarifies that while they receive immediate compensation for their claims, their insurer retains rights to recover those costs from the responsible party, maintaining fairness in the insurance process.