In title insurance, what does "subrogation" refer to?

In the context of title insurance, subrogation refers to the process where one party (in this case, the title insurance company) is allowed to step into the shoes of another party (the insured party) to pursue recovery from a third party that caused a loss or claim. This means that when the title insurance company pays out a claim to an insured party, it can then seek reimbursement from the party responsible for the loss.

Understanding subrogation is crucial in title insurance because it helps to ensure that the financial burden of claims does not solely rest on the title company but rather shifts to the responsible party. This process reinforces the principle of accountability, ensuring that those who cause a loss are held liable for their actions.

The other options do not accurately reflect the definition of subrogation. The act of conveyance pertains to the transfer of property rights, while coverage for lenders is related to specific insurance policy provisions, and procedures for paying claims describe operational aspects rather than the transfer of rights through subrogation.