Subrogation is a term that's well-known among insurance and legal companies but rarely by the customers who hire them. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more information you have, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is an assurance that, if something bad happens to you, the business on the other end of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a way to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the loss. 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 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 self 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.
How Does This Affect Individuals?
For one thing, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its losses by upping your premiums. On the other hand, if it has a competent legal team and pursues them aggressively, it is doing you a favor as well as itself. If all $10,000 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.
Additionally, if the total cost 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 personal injury law firm Tacoma WA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth contrasting the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.