Subrogation is a term that's understood in insurance and legal circles but rarely by the customers who employ them. Even if you've never heard the word before, it would be in your self-interest to understand the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If you get injured while you're on the clock, 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 accountable for services or repairs is often a time-consuming affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies usually decide to pay up front and assign blame later. They then need a path to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Your bedroom catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. The home has already been fixed up in the name of expediency, but your insurance company is out ten grand. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some insurance firms 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 insurance company is considered to have some of your rights in exchange 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 Do I Need to Know This?
For starters, 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 lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping 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 thousand-dollar 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, depending on the laws in your state.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Legal representation for Bonney lake Residents, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.