Module 2: Subrogation

Subrogation refers to the legal right of an insurance company to try and recover money paid out on your claim from the party responsible for the damage. 

The Basic Idea

If someone else causes damage to your home—like a neighbor leaving a candle unattended that starts a fire—your insurance pays for your repairs first. Your insurance company can then “subrogate,” or go after your neighbor to cover the costs for your repairs. If your neighbor has insurance, then the insurance companies will settle who pays for what. 

How Fault Plays a Role

For this to work, the insurance company must prove the other person was negligent or at fault. By definition, negligence is the failure to exercise the level of care that a reasonable person would under similar circumstances. It is important to remember that even an honest accident can be legally viewed as negligence if it was preventable, even if you never intended to cause any harm. This may be something that has to be determined by a court of law, as there are many factors that contribute to determining if someone was negligent. And if the fire report and investigation says the cause is undetermined or unable to be identified, that could make the subrogation process more challenging too.

What This Means for You

You might get your deductible back: If your insurance company successfully recovers the money from the at-fault party, you may get some or all of your deductible returned to you. This depends on your policy and your state laws, so be sure to ask your adjuster if this happens.

It works both ways: If you are the one who accidentally causes a fire that damages other units, your neighbors' insurance companies may come after you and your insurance for reimbursement. This is why your insurance policy includes liability coverage. Think of it as the bucket of money used to protect you if someone else's insurance company pursues you for damages.

It takes time: This process involves many legal parties and can be very slow, so patience is key. Our Front Porch are not attorneys and cannot give legal advice, but if you have questions about this process, please don’t hesitate to reach out.