Subrogation is a term that's understood in insurance and legal circles but rarely by the people who hire them. Even if it sounds complicated, it would be to your advantage to comprehend the steps of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If you get injured on the job, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the loss. The house has already been fixed up 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 way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 done to your self or property. But under subrogation law, your insurer is extended 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 Do I Need to Know This?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 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, based on the laws in most states.
In addition, 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 family law attorney Vancouver WA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth researching the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders informed as the case proceeds; 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.