Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders who hire them. Even if you've never heard the word before, it is to your advantage to comprehend the steps of how it works. The more information you have, the more likely relevant proceedings will work out favorably.
Every insurance policy you hold is a promise that, if something bad occurs, the business that insures the policy will make restitutions in one way or another in a timely manner. If you get hurt while you're on the clock, for instance, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a method to regain the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Your stove catches fire and causes $10,000 in home damages. Luckily, 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 reason to believe that a judge would find him responsible for the loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer 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 Should I Care?
For starters, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, 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 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal defense lawyer 99501, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth researching the records of competing companies to find out if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.