Home insurance protects you from damages to your home, personal belongings, and can even provide liability coverage if someone is injured on your property. But what happens when you have to make a claim on your homeowners insurance policy? One of the terms you may come across is subrogation.
What is Subrogation in Home Insurance?
Subrogation is a legal term that is commonly used in the insurance industry. It refers to the right of an insurance company to recover the money that it has paid out on a claim from the party that is responsible for the loss. In most cases, the insurance company will seek reimbursement from the at-fault party’s insurance company. However, there are some situations where the at-fault party does not have insurance or does not have enough insurance to cover the loss. In these cases, the insurance company may directly seek reimbursement from the at-fault party.
Subrogation is a very important right for insurance companies. It allows them to recoup some of the money that they have paid out on claims. Without this right, insurance companies would likely go bankrupt very quickly.
If you have any questions about subrogation or your insurance policy, you should contact your insurance agent or company.
How Does Subrogation Impact Homeowners?
While subrogation can be a helpful tool for insurers, it can also negatively impact homeowners. First, subrogation can lengthen the claims process, as the insurer will need to investigate the cause of the damage and identify the responsible party. This can add months to the process of getting your claim paid.
If the insurer successfully recovers damages from the third party, you may be required to reimburse the insurer for a portion of the money it paid out. This is because, under most home insurance policies, you are responsible for repairs up to your policy deductible. So, if your insurer pays out $10,000 to repair water damage and your policy deductible is $1,000, you must reimburse the insurer $1,000.
Subrogation can also increase your insurance rates. This is because subrogation claims are generally more expensive for insurers to settle than other types of claims. As a result, insurers may pass on some of these increased costs to you in the form of higher premiums.
What Happens When Subrogation is Filed?
In order for subrogation to take place, there must first be an insurance claim. Once the insurance company has paid out the claim, it will investigate to see if another party is responsible for the damages. If it finds that another party is responsible, it will file a subrogation claim against that party.
The party responsible for the damages will then have to reimburse the insurance company for the claim that they paid out. If they do not reimburse the insurance company, the company may sue the responsible party to get their money back.
Home insurance is a valuable protection that can safeguard your home and assets, and understanding the ins and outs of subrogation will help you navigate the claims process with greater confidence and clarity. By following the proper steps and working closely with your insurer, you can move forward with your claim, knowing that you have a reliable ally in your corner.
