Understanding Subrogation: A Crucial Aspect of Insurance Claims
When it comes to insurance, the terminology and processes can sometimes be complex and difficult to navigate, especially during a claim. One term that often arises but may not be fully understood by policyholders is “subrogation.” At Arete Adjusting, we believe that understanding subrogation is essential for the insured.
What is Subrogation?
Subrogation is a legal principle in the insurance industry that permits an insurer to assume the rights of the insured once a claim has been settled. Essentially, after compensating the policyholder for their loss, the insurance company can seek to recover the costs by pursuing a third-party responsible for the damage. This process helps insurers recover some or all of the money they paid out to their policyholder, while also ensuring that the responsible party is held accountable.
For example, if a policyholder’s property is damaged by a third party—such as in a car accident where the other driver is at fault—the insurer will cover the policyholder’s claim. After the claim is settled, the insurer may then pursue the at-fault party or their insurer to recover the costs. This pursuit of recovery is subrogation.
Why is Subrogation Important?
Subrogation plays a vital role in the insurance ecosystem for several reasons:
- Cost Recovery: It allows insurers to recover funds, which can help keep insurance premiums lower for all policyholders. By pursuing the responsible party, insurers can offset the costs of claims.
- Accountability: Subrogation ensures that the party responsible for the loss is held accountable, rather than the loss being absorbed by the policyholder or the insurer.
- Fairness: It promotes fairness by ensuring that the party who caused the damage is ultimately responsible for the costs, rather than spreading those costs across all policyholders.
How Arete Adjusting Can Simplify the Process
The subrogation process can be complex and time-consuming. At Arete, we consider subrogation at the onset and during a claim, not just at the end. By addressing subrogation during the entire claim process, we are affording insurers and their policyholders the best possible recovery.
By partnering with Arete Adjusting, insurers can benefit from:
- Expertise: Our team has extensive experience in subrogation, ensuring that every opportunity for recovery is explored and pursued effectively.
- Efficiency: We streamline the subrogation process, reducing the time and resources needed from the insurer’s side, allowing them to focus on providing top-notch service to their policyholders.
- Flexibility: Arete Adjusting doesn’t need to handle the entire claim process to assist with subrogation. Whether we manage the initial adjustment or just the subrogation, we offer flexible solutions tailored to the insurer’s needs.
Making Life Easier for the Insured
For policyholders, dealing with a claim can be stressful. They also must know when a company like Arete can step in and help.
All insurers want to be notified of a claim, even when the claim value is under the deductible. The difference between claims exceeding a deductible versus ones beneath is that if the claim is over the deductible, the insurers will do all the work. Beneath the deductible, the insured customarily proceeds alone.
Arete can work with policyholders when there is a high dollar deductible and they lack either an in-house team or the experience to pursue the claim. For instance, if a policyholder has a $100,000 deductible and an $80,000 claim, Arete can provide advisory and technical assistance.
By choosing an insurer that works with Arete Adjusting, policyholders can rest assured that their insurer is backed by a team of experts who will handle the subrogation process smoothly and efficiently. This means faster resolutions, better loss ratios, less hassle, and peace of mind for the insured.
Subrogation is a critical aspect of the insurance claims process that benefits both insurers and policyholders. By recovering costs from the responsible party, insurers can maintain fair pricing, and policyholders can avoid the financial impact of a claim. Arete Adjusting’s specialized services offer a streamlined, efficient solution that allows insurers to focus on what they do best while ensuring the process is handled expertly.