Subrogation is a concept that's well-known in legal and insurance circles but often not by the people they represent. Even if it sounds complicated, it is to your advantage to comprehend the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a commitment that, if something bad occurs, the company on the other end of the policy will make good without unreasonable delay. If a windstorm damages your property, for example, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is usually a confusing affair – and delay in some cases adds to the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. They then need a means to regain the costs if, in the end, they weren't actually in charge of the expense.
For Example
Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For starters, 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 have a stake in the outcome as well – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total loss 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 employment lawyer University Place WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth researching the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so fast; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.