Subrogation is a concept that's understood among insurance and legal firms but rarely by the policyholders who hire them. Even if it sounds complicated, it is in your benefit to comprehend an overview of how it works. The more you know, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you have is a commitment that, if something bad happens to you, the firm that covers the policy will make restitutions without unreasonable delay. If a hailstorm damages your property, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is sometimes a heavily involved 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 afterward. They then need a path to get back the costs if, ultimately, they weren't responsible for the expense.
Your garage catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. You already have your money, 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 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended 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 Policyholders?
For a start, 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, 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 attorney at law 98501, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth measuring the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.