Subrogation is a term that's well-known among insurance and legal firms but often not by the customers who hire them. Even if it sounds complicated, it would be in your self-interest to know the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is an assurance that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get hurt at work, for instance, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a way to recover the costs if, ultimately, they weren't in charge of the payout.
Can You Give an Example?
Your electric outlet catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him accountable for the damages. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as divorce attorney 98501-1548, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth looking up the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.