Subrogation is a concept that's well-known among insurance and legal firms but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to understand an overview of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you own is an assurance that, if something bad occurs, the company that covers the policy will make good without unreasonable delay. If you get hurt while you're on the clock, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. They then need a method to recover the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Can You Give an Example?
Your stove catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the loss. You already have your money, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 given some of your rights for having taken care of 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 Me?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them aggressively, 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 loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as getting a divorce with kids Lindon ut, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.