Harlon Hill's 2017 Lexus RX350 is insured by Allstate under a PAP. While stopped at a red light at Coit and Custer, he is hit from the rear by a drunk driver. Harlon is not injured, however, his car heavily damaged. The repair cost for Harlon's car is $5,000. Harlon has a $500 deductible for collision coverage. Harlon notifies Allstate of the accident and asks that Allstate pay the repair cost.

Allstate agrees to pay the repair cost (less deductible) and notifies Harlon that under the terms of the policy, he must cooperate with Allstate in pursuing subrogation.

a) Explain how the principle of subrogation operates under these facts.

b) How does subrogation support the principle of indemnity?

c) How does subrogation help to keep insurance rates affordable?