Claims Subrogation Process
By: Kathleen Murray, Capstone Client Advocate, July 2014
What is the subrogation process in a claim? Many times, to the benefit of the insured, the subrogation progress is initiated by the insurance carrier after closure of the initial claim. When subrogation occurs, the claims process has not yet ended.
Subrogation refers to the process an insurance company uses to seek reimbursement from the responsible party for a claim that had already been paid for a covered loss. Subrogation is extremely important because the insurance carrier is recovering payment for a claim previously paid not caused by the policy holder’s negligence. If subrogation is not pursued, premiums will increase as a result of poor loss experience.
Subrogation matters to an insured if:
• There is a covered loss, and
• A claim is submitted by the insured to the insurance carrier, but
• Another party is actually responsible for all or part of the damages (i.e., you have a car accident and the other driver caused the accident, or damage to your home was caused by a faulty appliance).
If your insurance carrier decides to pursue subrogation, the company will recover the damages from the responsible party. Damages my include costs paid by the insured to the insurance company which actually means the deductible, but might also include amounts over the policy limits not paid by the insurance company. This will depend upon the circumstances surrounding the loss, the laws in the state in which one resides, and the policy provisions. In all cases, participation and cooperation with the insurance carrier during the investigation phase is of primary importance. Assistance and cooperation are vital to help establish important facts, and preserve evidence, and may help to accelerate the recovery process.
When the subrogation process is completed, and money is received by the insurance carrier, a reimbursement check will be issued to the policy holder. The amount to be reimbursed is based upon the amount claimed and the amount recovered which would include the deductible. Oftentimes though, it is not that simple, based on different factors that come into play the calculation of the reimbursement amount can become quite complicated. This is when working in partnership with your claims representative and insurance agent becomes an integral part of the process.
Generally, you would receive reimbursement of your deductible equal to your proportion of the total amount claimed to the total amount recovered, net of expenses. We recommend discussing the specifics of your claim with your subrogation claims representative and keeping your agent informed in the process.
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