Subrogation is an idea that's well-known in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it would be to your advantage to comprehend the steps of the process. The more information you have about it, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you have is an assurance that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get injured at work, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Fortunately, 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 a decent chance that a judge would find him liable for the damages. The house has already been fixed up in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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 self or property. But under subrogation law, your insurer is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For one thing, 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 insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 lawsuit lawyer spanish fork ut, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth researching the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.