Subrogation is by far the BEST tool you have in case of an injury issue. But if you do not work in insurance, the chances are high that you have never heard of it. In the coming paragraphs I will explain what it is and give many examples (from our claim files) how subrogation saved the day for our customers.
What is subrogation?
In simplest terms, subrogation is the process by which your insurance company collects money paid on your behalf from the insurance company that is at fault. So basically you use your insurance to pay for a claim (even when someone else is wrong) and then your insurance company goes to the other carrier to get back the money they paid.
Why would anyone use subrogation when another party is wrong?
So we have long learned that if someone else is responsible, then that person should pay. But in the insurance world, it̵
7;s not that simple. Subrogation is a good solution in situations where you need a faster response than usual to a claim or you do not receive a response / resolution from the wrong party.Here are several examples of when our insured decided to use their insurance to get a claim paid INSTEAD of counting on the faulting party.
- Our insured was involved in a chain reaction accident (every intermediate car). Due to the complexity of the situation and the number of cars involved (and the fact that our insured did NOT have a vehicle to use), he made a claim for collision protection on his car. This enabled him to work with SIN insurance company to get the vehicle fixed faster and get him back on the road faster.
- Our insured was T boned by another vehicle. Although the claim was submitted to the other carrier, the offending driver did not respond to the adjuster’s request for a statement. As usual with car insurance accidents, the adjuster takes a statement from all parties involved. This, together with an accident report, helps to determine who is responsible. This can take time and when the person in charge does NOT follow it, the process slows down dramatically. Just like in the previous example, our insured used her collision protection to speed up the repair of her vehicle.
- After an accident where our insured went to the hospital to get medical attention, and the other insurance company was still considering liability, we advised the insured to use medical payments on his insurance to pay medical bills. Medical payments are simply a flawless coverage that you or your passengers can use to pay medical bills as a result of an accident. No argument – just send these bills to the adjuster and they will pay up to the insurance limit (we recommend that a minimum amount of $ 5,000 and higher limits be available). Because as you probably know, nurses expect to be paid on time, and they are not picky about who pays for it.
- After an accident where our insured was not so lucky to get hold of the adjuster, she filed a claim for a collision and rent compensation. She had to get to work and had no other vehicle. So she could get a rental car for the time her car did not work and while it was in the store and fixed.
Although the above are examples of car insurance situations, subrogation can easily apply to many types of insurance. Here is one from the homeowner’s insurance files.
- Our insured had a bathroom remodeled. Unfortunately, the plumber made a mistake and the pipe behind the bathtub broke and leaked all over the bathroom and into the corridor. Floors and plasterboard were damaged. The plumber was difficult, so our insured handed it in to his carrier to solve it.
It is important to note here that you must have the coverage on your insurance in order to use it. So if you do not have collision coverage, you can not go that route and therefore subrogation is not available. Just like rent compensation – you must have it on the insurance to file that claim.
The BEST part with subrogation
Most people forget that when you buy insurance you not only buy COVERAGE in the event of a claim, you also buy legal protection. The insurance company has a complete team of lawyers who will represent you if needed. These lawyers also work on the subrogation side.
These lawyers know the “language”, can process and will work on your behalf. I do not know about you – but I have no desire to go to law school. So when the claim goes to subrogation, you let the insurance company do all the heavy work. Between you and me, I like to let the people who have the education, knowledge and experience go and strike for me.
A side note: you also use YOUR policy. Your insurance company has a vested interest in taking care of YOU. As an injured party, the other insurance company does not.
What is the disadvantage of subrogation?
The positive far outweighs the negative, but there are few disadvantages to the subrogation process that you should be aware of.
- If there is a deductible to be paid, you must pay it. Remember it is YOUR policy, so coverage works the same way. For example, if you have a deductible of $ 500 and you file a collision claim, you pay $ 500, regardless of the situation.
- There is always a chance that the insurance company will not be able to get your deductible back or can only get part of it back. Yes, it happens. They will do their utmost to recover on your behalf, but there is a lot of legal maneuvering going on and sometimes there is a judgment where the other party is ultimately NOT held accountable, and therefore there is nothing to restore.
- While it is usually very timely to use your policy to get your claim resolved, it is not the subrogation process. It can take insurance companies months, if not years to get their money back. Still, it’s the best solution we have right now.
The lesson here?
Subrogation allows you to use your policy to get a quicker solution to a claim, especially in cases where there are significant damages or damages that need to be remedied.
When it comes to insurance coverage, you can not count on others having the right protection to protect YOU. So it is up to you to make sure that your insurances have adequate coverage if you need to use your insurance first and then go the subrogation route.
