Subrogation 101

In our business; insurance fraud investigation, we come across many subrogation cases. Most of the time, we are asked to investigate third parties on the behalf of insurance companies. The concept of subrogation is a complicated one; some of our individual clients are often confused about it, so we will try to explain it as best as we can.

What is Subrogation?

Subrogation is a term used by insurance companies to represent a particular right they reserve as an insurer. This right allows them to take legal action against a third party that was the instigator in an event that caused the insurance company to pay a policy holder. Whatever the amount they paid to the policy holder is recovered from the person who was the main cause of the damage.

For example; when a policy holder of any insurance company gets into an accident because of another car and damages his/her car as a result, the insurance company is obligated to pay for the damage to the policy holders’ car. They clear all the payments to the insured person and then they take legal action against the driver who caused the accident, to recover the amount they paid to the policy holder.

Different Scenarios

There are two main scenarios or courses of action where subrogation is concerned:

The first scenario is exactly what the aforementioned example explains. The insurance company pays the claim of the policy holder and then seeks to recover the amount from the responsible third party.

The second scenario is when a liability claim is brought against the policy holder of the insurance company. In this situation, the company pays the third party’s claim and then goes in search for another (responsible) third party to reclaim the amount paid in the claim.

Investigators

After reading the information above, you may be wondering where NSIU’s services come in? We investigate the accidents and occurrences and try to find out the truth behind them. Our investigators gather evidence and try to find out if events occurred exactly the same way, as the concerned parties say they did.

The simplified information above is aimed to facilitate a better understanding of the concept of subrogation. And if you need investigative help with a subrogation case, contact us (800-960-6748) to start an investigation into the matter at hand.