Subrogation is a term that's understood among legal and insurance professionals but rarely by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to know the steps of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out in your favor.
Every insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If a fire damages your home, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair a€" and time spent waiting in some cases compounds the damage to the policyholder a€" insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to recover the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
For Example
Your living room catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. You already have your money, but your insurance agency is out ten grand. 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 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. Normally, only you can sue for damages done 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 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, 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 a€" to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, 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 your state laws.
Additionally, if the total cost 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 Divorce law provo ut, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing firms to determine if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring 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.