Subrogation is an idea that's understood in legal and insurance circles but rarely by the customers who hire them. Even if it sounds complicated, it would be in your self-interest to comprehend the nuances of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is a promise that, if something bad occurs, the firm that insures the policy will make good in one way or another in a timely manner. If you get an injury while working, for instance, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a mechanism to get back the costs if, ultimately, they weren't actually in charge of the expense.
For Example
Your stove 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 reason to believe that a judge would find him accountable for the loss. You already have your money, but your insurance firm is out all that money. 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 after it has paid for something that should have been paid by some other entity. Some companies 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 insurer is given some of your rights in exchange 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 a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by boosting your premiums and call it a day. On the other hand, if it has a competent 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 one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total loss 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 Personal injury attorney near me Sumner WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the records of competing companies to find out if they pursue valid subrogation claims; if they do so fast; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.