Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders who hire them. Even if you've never heard the word before, it is in your benefit to know the steps of how it works. The more you know about it, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If you get injured while working, your company's workers compensation insurance picks up the tab 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 often a confusing affair – and time spent waiting sometimes increases the damage to the victim – insurance companies often decide to pay up front and assign blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Let's Look at an Example
Your bedroom catches fire and causes $10,000 in house damages. Luckily, 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. The home has already been fixed up in the name of expediency, but your insurance company is out $10,000. What does the company 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. Usually, only you can sue for damages to your person 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 timid on any subrogation case it might not win, it might opt to get back its expenses by increasing your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is doing you a favor as well as itself. 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 one-half to blame), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total expense 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 immigration lawyer near me Herriman UT, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth examining the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.