Subrogation is a concept that's well-known among legal and insurance companies but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the steps of the process. The more you know, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms often decide 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 actually in charge of the payout.
Can You Give an Example?
Your stove catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him accountable for the loss. The house has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company 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 done to your person or property. But under subrogation law, your insurer is considered to have 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 one thing, if you have a deductible, your insurer wasn't the only one 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 insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, 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 50 percent culpable), you'll typically get $500 back, depending on your state laws.
Additionally, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as discrimination attorney lakewood wa, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the reputations of competing companies to determine whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.