Unfortunately, claimants must often use their own insurance for a claim for which they weren’t at fault. Within the claim, you may have to pay various out-of-pocket expenses, such as deductibles or policy limit overages. Although it’s often a relief just to have the repairs completed and the bills paid, there is additional recourse for you and your insurance company to recover the money paid on the claim, including some of your expenses. This is called subrogration. Subrogation, or the recovery by your insurance carrier of monies paid for damages for which you are not responsible, is an essential piece of the claim handling process and helps insureds maintain lower premiums.
If you experience a covered loss for which you were not at fault, and submit a claim to your insurance company for handling, your insurance company will, in turn, pursue reimbursement of any damages paid (to include your deductible) from the at-fault party’s insurer. If, by chance, the party responsible for your damages was uninsured or under-insured at the time of the incident your insurance company can pursue recovery directly from that party.
In order to maximize your recovery it is important for you, as the insured, to report the loss promptly to your insurance carrier, provide information to identify the responsible party, preserve evidence, and make damaged property accessible for immediate inspection. Early investigation is key to reducing the risk of spoilage of evidence. It is your duty as the insured to mitigate damages and to work with your insurance carrier to effectively prove damages through the appraisal process, photographs, statements from insureds, claimants and witnesses, and police reports, when available.
The insurance company will conduct a prompt and thorough investigation. Your carrier also recognizes the sense of urgency when placing government entities on notice of your claim. Your insurance company will exhaust all efforts to identify potential third parties and put them on notice of your claim.
When your insurance carrier has a successful recovery through the subrogation process, their bottom line reaps the savings and those savings are passed onto you in the form of lower premiums. Additionally, you, as the insured, will be reimbursed any deductibles and out-of-pocket expenses related to the covered loss.