Subrogation, by definition, is when an insurance company seeks payment or restitution from a third party that caused damage or injury to an insured person or property. Usually this means your insurance company will try to recover payments from the insurance company covering the party at-fault.
For example, say you have homeowner’s insurance, and your neighbor chops down a tree which falls onto your insured property line and causes extensive damage to your house and fence. You could wait for your neighbor’s insurance company to pay for the damage. Or, you can file a claim for the damage with your insurance company and, after paying any deductible, get the money you need to make repairs much quicker. It can be frustrating to use your own money and home insurance coverage for a claim that wasn’t your fault, but subrogation can help you and your insurance provider recover that money.
Since both you and your insurance company paid a significant amount of money for an accident that was not your fault, your insurance company may decide to subrogate your neighbor’s insurance company for restitution of the money they paid to you, as well as the deductible you were required to pay. Your insurer will contact your neighbor’s insurance company directly to begin the process.
Keep in mind that there are times when liability for damages or loss is not clear cut. If both parties are partially at fault, both insurance companies may make subrogation claims against the other. Also, it is possible for a subrogation claim to court if you and your insurer agree that a lawsuit is the only option available to fully recover payment.
Subrogation is a positive in home insurance terms because it allows the burden to fall to the actual party who caused damage. Most, if not all of the uncomfortable payment recovery process is taken care of by a company you’ve employed for these purposes.