What is Subrogation? | Openly

You may—or may not—have heard of the term "subrogation" before. But what does it mean, especially within the context of homeowners insurance? Keep reading to learn more about subrogation and how it can impact you as a homeowner.

At a glance:

• Subrogation is the process where your insurance company seeks to recover claim payouts from the at-fault party.
  

• Understanding subrogation can simplify the claims process for homeowners as their insurer handles the recovery efforts.
  

• Homeowners play a role in subrogation by providing necessary information and cooperating with their insurance company's investigation.
  
  

What is subrogation? 

Subrogation is when your insurance company steps in to recover money it paid out on your claim from the party responsible for the damage. 

For example: a tree branch falls on your roof during a storm, causing significant damage. Your homeowners insurance covers the repairs. But what if the tree belonged to your neighbor? In this case, your insurance company might use subrogation to recover the money it paid out from your neighbor or their insurance company. 

Why is subrogation important?

Subrogation is important for several key reasons, including its impact on home insurance premiums and policies. By recovering funds from the responsible party, insurance companies can keep their costs down. This ultimately helps to keep your insurance premiums more affordable.

If your insurance company successfully recovers the funds from the responsible party, it strengthens their financial position and helps to maintain the stability of the insurance pool.

How does subrogation benefit you?

You might be wondering, "How does subrogation benefit me?” The answer lies in keeping your insurance premiums low.¹ Insurance companies use the money recovered through subrogation to offset their costs. This, in turn, may have an impact on the homeowner's insurance rates.

What to expect during the subrogation process

If your insurance company determines that subrogation is applicable to your claim, they will initiate the process. This typically involves:

• Investigation—Your insurance company will investigate the incident to determine if there is a third party responsible for the damage.
  

• Legal action—If necessary, your insurance company may file a lawsuit against the responsible party or their insurance company.
  

• Settlement—The goal is to reach a settlement that recovers the amount your insurance company paid out for your claim.
  
  

Your role in the subrogation process

The subrogation process is generally passive for the named insured. However, while your insurance company handles the majority of the subrogation process, there are a few things you can do to assist:

• Providing all relevant information, including police reports, witness statements, photographs, and any other documentation related to the incident.
  
  
• Be available to answer questions, as your insurance company may need your accurate account of the events to build a strong case. 

It’s also important that you familiarize yourself with the terms of your homeowners insurance policy, including any clauses related to subrogation. Pay close attention to:

• Your rights and responsibilities to better understand your obligations and your rights regarding the subrogation process.
  
  
• Exclusions and limitations so that you are aware of any situations where subrogation may not apply or may be limited.
  
  
• Some contracts, such as construction contracts, may include a waiver of subrogation clause.² This means that the parties involved agree to waive their right to pursue subrogation claims against each other.

If you have any questions or concerns about subrogation, don't hesitate to contact your insurance agent. They can provide you with specific information and guidance on your policy and the subrogation process.

Subrogation and your insurance

It's important to note that if your insurance company recovers the full amount of your claim through subrogation, you may be entitled to reimbursement of your deductible. However, this is not always guaranteed and depends on the specific terms of your policy.

Understanding how subrogation impacts you

While often operating behind the scenes, subrogation plays a vital role in the smooth functioning and affordability of your homeowners insurance. It's a mechanism that allows insurance companies to seek recovery from responsible parties, ultimately helping to keep premiums in check and ensuring the long-term stability of coverage. 

If you ever find yourself in a scenario where subrogation might be involved, remember that your insurance agent is your best resource for personalized guidance and support.

We provide this information to help you understand insurance. Any coverage is subject to the terms of your policy. Please refer to your policy and declarations page for complete terms, conditions, exclusions and coverage details. Openly may provide links that lead to an external website that may promote goods and services that Openly does not endorse. We are not responsible for the content, claims, or representations made on the linked website. Please review their terms and policies before engaging with any offerings.

¹ Julia Kagan. “Subrogation in Insurance: What it Is and Why It's Important.” Investopedia.com. Updated July 16, 2024. Accessed 21 April 2025. https://www.investopedia.com/terms/s/subrogation.asp

² Caroline Banton. “What Is a Waiver of Subrogation? Types and Reasons For Needing.” Investopedia.com. Updated 11 August 2022. Accessed 21 April 2025. https://www.investopedia.com/terms/w/waiver-of-subrogation.asp#:~:text=A%20waiver%20of%20subrogation%20is%20a%20provision
%20that%20prohibits%20an,auto%20insurance%20policies%2C%20and%20more .