Which of the following statements about subrogation is true?

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Which of the following statements about subrogation is true?

A) Subrogation eliminates adverse selection.
B) Subrogation helps to hold down the cost of insurance.
C) Subrogation results in violation of the principle of indemnity.
D) Subrogation permits a party who caused a loss to avoid responsibility for the loss.

Answer: B) Subrogation helps to hold down the cost of insurance.

Insurance

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

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