Subrogation is a term that's understood in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it would be in your self-interest to know the nuances of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely manner. If your property suffers fire damage, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay in some cases adds to the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a method to recover the costs if, ultimately, they weren't responsible for the payout.
For Example
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?
How Does Subrogation Work?
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. Normally, only you can sue for damages to your self 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if you have a deductible, your insurer wasn't the only one 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 lax about bringing subrogation cases to court, it might choose to get back its costs by boosting 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 acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as employment lawyer 98466, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth comparing the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.