Subrogation is a concept that's well-known among legal and insurance firms but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to know an overview of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If you get injured at work, for instance, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair a€" and time spent waiting sometimes compounds the damage to the victim a€" insurance firms often decide to pay up front and assign blame afterward. They then need a means to get back the costs if, in the end, they weren't actually in charge of the payout.
Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well a€" 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 ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as divorce lawyer pleasant grove ut, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing firms to evaluate if they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.