It’s a word most people have heard in passing, but don’t really understand. Subrogation is a critical step in the claims resolution process. If you file a claim with your insurance company, even though another person was at fault, your insurance will generally pay for the damage to your property.
After you have received payment for your damages your insurance company will subrogate against the individual that caused the damage.
Let’s discuss the following claims example.
A fire breaks out when a neighbor puts a lit cigarette in a trash receptacle. The resulting fire not only damages that person’s apartment but the damage to fellow renters is significant. This is where a renters insurance policy becomes so important.
Subrogation is the process of recovering monies paid to a policyholder from the responsible party. Generally, it’s something fought out between insurance companies. A company can subrogate against the individual who caused the loss, but the expression “blood from a stone” comes to mind. This means that even though a person might be responsible, if they do not have the financial means to pay for the damages your insurance company (or you, if you don’t have renters insurance!) could be left paying the bill.
If the subrogation is successful not only does it allow the insurance company to recover what was paid out, and thus keep premiums reasonable, but it can often allow the recovery of your deductible. When the process is complete, if successful, you may get a check for the deductible you paid out.
Generally, this is a behind the scenes process to the consumer. However, if your insurance company requests your cooperation in the process, make sure you provide the information they request immediately. Your cooperation makes the process possible. Your Insurance Experts For Renters can answer specific questions if you find yourself in this situation, and this is just one more reason why Effective Coverage is the solution for you.