Subrogation is a term commonly used in the insurance industry for when a customer files a claim on their insurance policy, the insurance company pays for the damages but then determines that the liability can be assigned to a third party.
Want an example?
Many years ago, I had a customer come home from dinner and the entire interior of the house was covered in a yellow powdery film. When the customer went into their laundry room while inspecting the house, they found that the nozzle of their fire extinguisher had blown off which caused all of the fire retardant to blow throughout the laundry room.
Their AC handler and the intake happened to be laundry room as well. When the AC turned on, the powder was allegedly sucked into the AC unit and the AC unit blew the powder throughout the house. The claim was over $100,000. And the insurance company felt that the manufacturer of the fire extinguisher was at least partially liable for the damages.
After the insurance company payed for the damages of the insured. The insurance company pursued the fire extinguisher company for reimbursement through a process called subrogation.
Does subrogation only apply to home insurance?
Most times we see subrogated claims with auto accidents but keep in mind they can occur on homes as well because most home insurance policies have a subrogation a clause built into the policy.
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