Mansell, Engel & Cole

The case for subrogation in catastrophes

Subrogation action is an important insurance concept to understand. With subrogation, one party stands in for another party when making a claim for damages. For example, if you’re driving down the road and another driver runs a red light and side swipes you, your insurance provider may pay for your damages. However, because the other driver was at fault in the accident, your insurance company—acting in your place—will seek reimbursement from that driver’s insurance provider. This scenario is one of the most common types of subrogation.

It makes logical sense to pursue subrogation action in cases where there is a clear third party at fault. However, when natural disaster strikes, such a case is generally considered an “Act of God” event with no clear, tangible culprit.

However, some experts now believe that the case for subrogation can be made, even in catastrophe losses. In a recent webinar, one subrogation expert explains that an Act of God may be only partially to blame for the losses experienced in a disaster. There might also be “contributing causes” at play.

For instance, in the event of a hurricane, you could expect your home to sustain significant wind and water damage. While it may easy to conclude that the storm was the sole cause of your losses, experts recommend approaching the case from a different angle. Were there any other forms of negligence that may have exacerbated the loss? For example:

  • Was your home structurally sound? Was it designed and constructed according to code?
  • Did improper city planning aggravate the damage? Did land development include sufficient drainage channels to minimize flooding?

Making the case for subrogation action in the event of catastrophe an prove fruitful, though it is complex to prove. An experienced insurance attorney can be extremely valuable in pursuing such a claim.

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