Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is a promise that, if something bad occurs, the company that insures the policy will make good in one way or another without unreasonable delay. If your real estate suffers fire damage, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is typically a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. The home has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by upping your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 accountable), you'll typically get $500 back, depending on your state laws.
Additionally, if the total price 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 serious injury attorney reisterstown md, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth comparing the records of competing firms to determine whether they pursue legitimate subrogation claims; if they do so fast; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance company has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.