Subrogation is a term that's understood in legal and insurance circles but rarely by the customers who employ them. Even if it sounds complicated, it would be to your advantage to understand the steps of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Any 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 without unreasonable delay. If you get hurt at work, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a means to regain the costs if, when all the facts are laid out, they weren't in charge of the expense.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in home damages. Happily, 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 a decent chance that a judge would find him accountable for the damages. The house has already been repaired in the name of expediency, 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 done to your person or property. But under subrogation law, your insurer is extended some of your rights for having taken care of 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 starters, 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 lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on the laws in your state.
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 lawsuit lawyer spanish fork ut, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth looking up the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.