Subrogation

Subrogation Process | Subrogation Rights | Insurance Claim | Recovery of Damages

Subrogation is a legal remedy that commonly refers to the legal doctrine of substituting one creditor for another. When an insurance company has paid a policyholder’s claim for damages, which another party caused, the insurance company may use the subrogation process to seek reimbursement of the damages from the responsible party.

Generally subrogation rights are divided into five main categories that include, but are not limited to:

Indemnity insurer’s subrogation rights
Surety bond subrogation rights
Lender’s subrogation rights
Banker’s subrogation rights
Business creditor’s subrogation rights

Exercise of subrogation rights for recovery of damages may involve costs a policyholder has paid, such as the deductible, and amounts over policy limits, not paid by the insurance company.

Whether or not an insurance company pursues subrogation will depend on three main variables:

Circumstances surrounding the loss
State laws, which are different from one state to another
The insurance policy provisions

Methods for seeking damages from responsible parties range from presenting a claim for payment to the responsible party’s insurance carrier, to the use of collection agencies or filing a lawsuit, when initial claims are not paid.

The amount an insurance company seeks through subrogation depends on the amount each party was at fault. Liability may be clear-cut, if a driver runs a red light at an intersection and causes an accident. However, establishing the extent of liability is not always simple, and often both or multiple parties bear a portion of liability. The parties may be equally liable or a larger percentage of fault may fall to one party than the other. When liability, documentation of damages or evidence is in dispute, arbitration or mediation may be the best avenue to arrive at an equitable settlement.

When dealing with subrogation rights, insurance companies often turn to attorneys with experience in subrogation law for assistance with the subrogation process. When subrogation ends up in a lawsuit, attorneys experienced in arbitration, mediation and trial work provide the expertise needed to achieve positive results whether pursuing recovery of damages on behalf of the insurance company or providing insurance defense in a settlement claim.

Subrogation

Subrogation Process | Subrogation Rights | Insurance Claim | Recovery of Damages

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