Subrogation is a concept that's well-known among legal and insurance companies but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand the steps of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the firm that covers the policy will make good without unreasonable delay. If your home is burglarized, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Your electric outlet catches fire and causes $10,000 in home damages. Happily, 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 decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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 insurance company 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.
Why Does This Matter to Me?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by boosting your premiums. On the other hand, if it has a capable legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. 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 one-half culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as family law east olympia wa, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth contrasting the reputations of competing companies to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.