Hurricane Harvey and Commercial Insurance Claims: What is “Subrogation?”
Call The Doan Law Firm today to find out how an experienced insurance lawyer
can protect your rights
Hurricane Harvey has caused, literally, billions of dollars in damages
to the Texas gulf coast. In many cases, at least a portion of these losses
will be covered by some form of property damage insurance. This also means
that insurance companies will explore every avenue available to reduce
their own losses due to settlements that they must pay to their policyholders.
One such avenue is “insurance claim subrogation,” a process
that will probably be unfamiliar to anyone outside the legal and insurance
In today’s post, the Commercial Property Insurance lawyer at the
Doan Law Firm will give a brief explanation of the subrogation process
and how subrogation claims can affect the relationship between a property
owner and his or her insurance carrier.
What is a “subrogation claim?”
“Subrogation” is the legal principle allowing one party to
take over the rights or remedies of another party against a third party.
This is usually stated as “subrogation allows one party to ‘step
into the shoes’ of another party.”
Subrogation cases arise
after an insurance company pays a claim submitted by its injured policyholder.
Then, to recover at least some of its losses, the insurer will often sue
the “at fault” party (the party that caused the loss) to recover
the amount that it was compelled to initially pay. The majority of subrogation
claims are the result of motor vehicle accidents. However, there is usually
nothing that would prevent commercial property insurers from using subrogation
to recover at last a part of their tremendous losses resulting from Hurricane Harvey.
In order to file a subrogation claim against a third party, your insurer
needs your permission to do so. This is usually done via a “subrogation
clause” that is included in practically all types of private and
commercial property. Additionally, some government disaster benefit programs
may legally require subrogation on your part if you are to participate
in those programs.
A tactic that is sometimes employed by insurance carriers is called the
“no subrogation clause” or “no subrogation agreement.
In this tactic, an insurer will insert a clause in a settlement agreement
that specifically forbids further legal actions after a claim is settled.
The logic behind such clauses is as follows:
1. You suffer an injury and the responsible party’s insurer, and
possibly your own carrier, pays your claim.
2. As part of the settlement agreement, you agree that you will not file
any additional claims against the responsible party’s insurer.
3. Since subrogation involves having your insurer “stand in your
place” to sue for any losses it may have suffered, a “no subrogation”
clause prevents your insurer from suing anyone else to recoup its losses.
Why you may need a commercial insurance claims lawyer in subrogation claims
As an unknown attorney once stated, “Whenever you hear the word ‘subrogation,’
start looking for a lawyer.”
From the very basic information presented here, it should be obvious that
commercial insurance claims and subrogation actions can present a very
complex legal situation. As in any matters involving insurance law, it
is vital that you consult a lawyer with experience in these issues in
order to protect your best interests when dealing with insurance carriers
and their employees.
In most cases, subrogation will be a matter between your commercial property
insurance carrier and whomever it feels was responsible for it having
to honor your claim. Thus, the only time that you may become a party in
such an action is if an insurance carrier asserts that you were at least
partially to blame for damages that occurred to someone else’s property
and such damage was the result of negligence by you. Such negligence can
be difficult to prove, but defending yourself against such a claim may
require the services of an experienced Commercial Insurance Claims lawyer.
If you are involved in a subrogation action, you are strongly advised to
retain legal counsel with experience in all aspects of insurance law.
The Doan Law Firm 1 Riverway Suite 2325 Houston, Texas 77056 (832) 835-0000