Subrogation is a term that's well-known among legal and insurance companies but rarely by the customers they represent. Rather than leave it to the professionals, it is in your benefit to comprehend the nuances of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a promise that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If your house burns down, for instance, 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 heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a way to recover the costs if, once the situation is fully assessed, they weren't responsible for the payout.
For Example
Your garage catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance company is out all that money. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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 insurer is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total loss 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 Attorney at law Lacey, WA, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth contrasting the records of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders updated 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 insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.