Subrogation is a term that's well-known in legal and insurance circles but sometimes not 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 comprehend an overview of the process. The more you know, the better decisions you can make about your insurance policy.
Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your house is robbed, for instance, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a confusing affair – and delay often compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, when all the facts are laid out, they weren't responsible for the payout.
Your stove catches fire and causes $10,000 in house 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 reason to believe 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 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 insurance firms 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 to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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.
Why Should I Care?
For a start, if you have 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is acting both in its own interests and in yours. If all 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 responsible), you'll typically get $500 back, depending on your state laws.
Moreover, 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 bankruptcy 66061, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their customers posted as the case goes on; 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 insurer has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.