Subrogation is an idea that's well-known in legal and insurance circles 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 in your benefit to comprehend the steps of how it works. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If you get hurt while working, for instance, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
Your electric outlet catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. 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 to blame for the loss. The home has already been fixed up in the name of expediency, 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 method that an insurance company uses to claim payment 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. Under ordinary circumstances, 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 for making good on 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 Individuals?
For one thing, 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 lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by raising your premiums. On the other hand, if it has a proficient legal team and pursues those cases aggressively, 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 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as insurance claims disputes Tacoma, WA, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the records of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.