Who Really Pays the Insurance Claim?

Richey-Barrett Blog (34)

Dealing with property claims is always a concern for you, the property business owner. Do you have enough insurance coverage for the loss? What if the loss is caused by a defective appliance such as a refrigerator, stove, electrical cord, and/or a water supply line? Suppose you are a landlord, and the property loss is caused by your tenant’s negligence in starting a stove fire, or your tenant leaves the bathtub water running unattended resulting in an overflow, or your tenant carelessly leaves on an electric blanket which catches on fire. Typically your insurance company will pay the covered loss less your deductible. If you are a landlord, it is prudent to require your tenants purchase a tenant’s insurance policy providing both property and liability coverage. The tenant’s insurance policy can also protect you, the landlord, indirectly. These scenarios get into an area of insurance claims we do not often hear about, the area being after- the- fact settlements.

After-the-fact insurance settlements involve subrogation. Subrogation is an area of law which allows your insurance company to settle your claim with you, the insured, in a timely manner and then pursue the wrongdoer for full payment of the claim. Because your insurance coverage provides timely settlement, you, the insured, are able to get your property repaired and operational as quickly as possible. Still, claims take time to investigate and make determinations of fault. Subrogation allows your insurance company to pursue payment from the negligent party or manufacturer of a defective product once the full investigation is complete.

How does subrogation benefit you, the insured, and your insurance company?  If your insurance company receives partial or full reimbursement through subrogation, you will receive reimbursement of your deductible.  Recovery of loss payments through the process of subrogation saves your insurance company money, thus keeping its costs down, which in turn keeps the overall cost of insurance down.

You, the insured, can help:

  • Keep the defective product for your adjuster. Do not throw it out or let your contractor throw it away.
  • Furnish all available documentation requested by your insurance adjuster.
  • Cooperate with your adjuster to help mitigate your loss. Your adjuster is your ally.

Contact your Trusted Choice Independent Insurance agent at Richey-Barrett Insurance.


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