Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to understand an overview of the process. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you hold is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury at work, for instance, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a path to regain the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at an Example
Your living room catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the loss. The house has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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 to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as medical negligence lawyer Washington DC, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth measuring the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.