The Process of Subrogation in Australia
Let’s walk through the subrogation process step-by-step so you can see how it plays out in real life:
- You Make a Claim: Something happens, say, a burst pipe floods your home due to a neighbour’s faulty plumbing. You file a claim with your insurer and they cover the repair costs (minus any excess, of course).
- Your Insurer Investigates: The insurer looks into the cause of the damage. If they find that someone else (like your neighbour) is responsible, they’ll start the subrogation process.
- Recovery Action: Your insurer pursues the at-fault party or their insurer to recover the money they paid out. This could involve negotiations or, in some cases, legal action.
- You Stay Out of It: As the policyholder, you’re usually not involved in the subrogation process. Your insurer handles it and you get to focus on getting back to normal.
Real-Life Examples of Subrogation
To make this clearer, here are a couple of scenarios where subrogation might come into play:
- Car Accidents: If another driver runs a red light and damages your car, your insurer might pay for repairs under your comprehensive policy. They’ll then chase the at-fault driver’s insurer to recover the costs.
- Property Damage: Suppose a contractor accidentally damages your business premises while working next door. Your insurer covers the repairs, then seeks reimbursement from the contractor’s insurance.
- Product Liability: If a faulty appliance causes a fire in your home, your insurer might pay for the damage and then pursue the manufacturer for selling a defective product.
What Does This Mean for You?
Here’s what you need to know:
- Cooperate with Your Insurer: If your insurer asks for details about an incident (e.g., witness statements or photos), provide them promptly. This helps them build a strong case for subrogation.
- Understand Your Policy: Some policies have specific clauses about subrogation. Our team at Tank Insurance can help review your policy to make sure you’re clear on how it works.
- It’s Not Your Fight: Once your claim is paid, subrogation is between your insurer and the third party. You don’t need to stress about chasing anyone down.
Got concerns or questions? Don’t hesitate to contact us or have a go at our blog and free Health Check eBook!
