Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the people they represent. Rather than leave it to the professionals, it would be in your benefit to understand the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If your home suffers fire damage, for example, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and delay often compounds the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a path to regain the costs if, in the end, they weren't in charge of the expense.
Let's Look at an Example
Your living room catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the loss. You already have your money, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
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. Usually, only you can sue for damages to your person 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 that was 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, it wasn't just your insurance company that 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law lawyer 23294, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth comparing the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.