What term describes the process where one party seeks compensation from a third party responsible for a loss?

Subrogation is the correct term for the process where one party seeks compensation from a third party that is responsible for a loss. This occurs after an insurer has paid a claim to the insured for a loss. The insurer can then step into the shoes of the insured and pursue recovery from the third party that caused the loss. This process helps hold the responsible party accountable while also allowing the insurer to recover the amount it paid out, thereby maintaining the overall stability of insurance mechanisms.

Indemnification generally refers to the compensation for loss or damage, ensuring that an individual or entity is made whole again after suffering a loss, but it does not specifically involve the pursuit of compensation from a third party. Reimbursement is about repaying someone for expenses incurred, which does not encompass the idea of seeking compensation from a responsible third party. Allocation pertains to the distribution of resources or responsibilities, but it doesn't apply to the concept of recovering damages from another party. Thus, subrogation is the most accurate term in the context of this question.