Subrogation is a term that's understood among legal and insurance professionals but often not by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you have 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 your home is burglarized, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since ascertaining 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 companies in many cases decide to pay up front and figure out the blame after the fact. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Let's Look at an Example
Your living room catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the damages. The house has already been fixed up in the name of expediency, but your insurance firm is out ten grand. What does the firm 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 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 self or property. But under subrogation law, your insurer is given 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 Should I Care?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by increasing your premiums. On the other hand, if it has a proficient legal team and pursues them efficiently, 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 culpable), you'll typically get $500 back, based on the laws in most states.
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 family law olympia wa, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth examining the records of competing companies to determine whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.