While driving home from work,Bailey's car is struck from behind by a van full of drunken college students. Asimov is the driver of the van. The resulting damage to Bailey's car totals $7,000. Bailey files a claim under his own auto insurance policy to have his car repaired,but his insurance policy only covers $6,000 of the $7,000 loss. Bailey pays the remaining $1,000 of the loss out of his pocket. Which of the following is a true statement?

Question

Quizplus · Accepted Answer

Both Bailey and his insurer have subrogation rights against Asimov for the damages he caused. Subrogation is the legal process where an insurance company or insured person pays for a loss suffered by a third party and then seeks reimbursement from the party responsible for the loss. In this case, Bailey's insurer has the right to seek reimbursement from Asimov for the $6,000 it paid out, and Bailey himself also has the right to seek reimbursement from Asimov for the remaining $1,000 he had to pay out of his pocket. Therefore, option C is the correct answer. Option A is incorrect because Bailey does have a right of subrogation against Asimov for the $1,000 he paid out of pocket. Option B is also incorrect because Bailey's insurer does have a right of subrogation against Asimov for the $6,000 it paid out. Option D is also incorrect because Bailey cannot sue Asimov personally for the full $7,000 damages to his car as he has already been compensated for $6,000 by his insurer.

While Driving Home from Work,Bailey's Car Is Struck from Behind