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Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers who employ them. Rather than leave it to the professionals, it would be in your benefit to understand an overview of the process. The more you know, the better decisions you can make about your insurance policy.

An insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your house suffers fire damage, for example, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies often decide to pay up front and assign blame after the fact. They then need a method to recover the costs if, in the end, they weren't actually in charge of the expense.

For Example

Your stove catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?

How Does Subrogation Work?

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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For one thing, if you have a deductible, your insurance company wasn't the only one who 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 opt to recoup its expenses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, 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 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.

Additionally, if the total loss 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 fathers rights attorney Boulder City nv, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance companies are not created equal. When shopping around, it's worth looking at the records of competing agencies to find out whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.