Subrogation is an idea that's understood in insurance and legal circles but rarely by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to understand the nuances of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury at work, your company's workers compensation picks up the tab 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 regularly a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
Let's Look at an Example
Your bedroom catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. You already have your money, 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 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. Normally, 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 making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss of an accident is over 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 attorney at law 98501, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking up the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.