What Is Subrogation? Here’s What You Need To Know
Although subrogation is a word that seems to come straight off an alien dictionary, subrogation is as earthly as any word can be. What is subrogation? It is a process whereby an insurance company seeks reimbursement from a third party for claims paid out by the insurance company.
Subrogation happens when you’ve got a covered loss and submit a claim to your insurance provider. Still, another party is responsible for all or a portion of the damages. For example, when a car accident and the other driver caused the injury, or if a defective appliance caused damage to your house.
In both cases, your claim may be paid, but your insurance company may seek compensation from the responsible party. And this is the long and the short of what subrogation is if you are curious. What happens during a subrogation procedure is dependent ondependstors: your policy’s provisions, the laws in your state, and the added.
Subrogation is undertaken mainly to recoup payment for damages the insured party didn’t cause. If you think it’s selfish of the insurance company, it is just fair play. If your insurance company paid for sums over your policy limitations, your company has every right to recover the overpaid money.
Don’t worry. Your insurance company will handle it for you!
Don’t worry, however, because your insurance company usually does subrogation procedures against another party, not you. Conversely, a subrogation procedure could be an action against you if you are responsible for damages.
In this instance, the third-party insurance company will file a claim against you, usually to your insurance provider. Your insurance provider will review the facts to find out if you’re liable. Your insurance company may make payment to the other business. But only if you have coverage and are responsible for all or a portion of the damages.
Often, damages are not clear-cut. Sometimes, both parties could be partly responsible. Depending on your state’s laws, both parties may share the obligation for payment. For instance, one party may be 40% reliable, while the other maybe 60% responsible. This may mean that both firms make subrogation claims, and every firm pays their specific part of another party’s claim.
If subrogation proceedings are going on, you must cooperate fully in the investigation stage. Your support will help confirm the relevant facts, support the evidence, and help hasten the retrieval procedure.
Some subrogation companies help insurance companies pursue subrogation claims fast and cheaply. These companies allow you to recover damages that the other party, not you, should pay.
What happens if you pay part of the sum of the damages? Any amount recovered from the subrogation proceedings will be used to reimburse you.