A standard North Carolina insurance policy comes with many clauses and conditions to the coverage it provides and it pays to know what these clauses and conditions mean. One very important clause that may affect you is called subrogation; so let’s take a look at subrogation and what it means to you.

Dishwasher Disaster

Suppose you just purchased a brand new dishwasher and within a week, your new dishwasher experiences a mechanical problem, resulting in a fire that causes significant damages to your home. Since fire is a covered loss, you are covered! Your insurance company inspects the damages and pays for the amount (subject to policy limits) minus your deductible.

Subrogation and what it means to youThis is Subrogation!

Since faulty wiring from the dishwasher manufacturer caused the fire, the responsibility lies with the dishwasher manufacturer. Since your insurance company paid you for the loss less your deductible, they now have the right to attempt recovery from the dishwasher manufacturer for the total claim. This is subrogation! Once your insurance company has compensated you for your claim, technically you have assigned or transferred your rights to the insurance company.

Subrogation Receipt

Your insurance company may ask you to sign a subrogation receipt, which confirms the following:

  • Total amount of the loss (inclusive of your deductible)
  • Amount the insurance company paid
  • Your agreement to assist the insurance company in recovery

If your insurance company is reimbursed for the full amount of the damages, you will be reimbursed for your deductible. However, if the insurance company only receives a partial payment for the loss, you will be compensated a portion of your deductible.

*Keep in mind that if your insurance company does not pay you, you still maintain the right to seek payment/recovery from the responsible manufacturer.

Subrogation Condition Details

There are certain conditions applicable to the subrogation clause in the insurance policy. This will indicate the following:

  • The right to waive subrogation prior to a loss
  • The right of the insurance company to a claim against responsible parties
  • Your responsibility in cooperating with the insurance company throughout the process

Your N.C. Independent Insurance Agent Can Answer Your Questions!

Subrogation does not need to be complicated. Your local N.C. independent insurance agent can help you understand your rights under any of your N.C. insurance policies. Before collecting money for your claim, make sure that you never release another party that may be responsible for your damages. Doing so may hinder your insurance company’s recovery rights, which may prevent them from paying your claim.   When in doubt, ALWAYS contact your N.C. independent insurance agent!

 

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