What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured?

Subrogation is the legal concept that allows an insurance company to take on the rights of the insured to pursue a third party for reimbursement after paying a claim. When damages are inflicted on an insured party due to the actions of another individual or entity, the insurance company may step in and seek to recoup the costs from that responsible party. This process is vital because it helps prevent the insured from receiving a double recovery—once from the insurance payment and again from the responsible party.

In practice, subrogation ensures that the financial burden is placed on the party at fault, rather than the insurance company or the insured. This aligns the incentives of the insurance provider to act in the interest of their policyholder while also maintaining the integrity of the insurance system. Subrogation rights are typically outlined in the insurance policy, establishing the framework and conditions under which the insurer can pursue such actions.

The other terms mentioned, such as warranties, concealment, and utmost good faith, do not relate directly to the insurer's ability to sue a third party for damages. Warranties refer to promises or guarantees within a contract, concealment involves withholding critical information that could affect an underwriting decision, and utmost good faith is a principle governing the ethical obligations of both parties