Subrogation is a term that's understood among insurance and legal companies but often not by the people who employ them. Even if you've never heard the word before, it is to your advantage to know the steps of the process. The more you know about it, the better decisions you can make about your insurance policy.
Any insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your house burns down, for instance, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair a€" and delay often compounds the damage to the victim a€" insurance companies often decide to pay up front and assign blame later. They then need a means to regain the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
Your bedroom 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 finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the damages. You already have your money, but your insurance agency is out all that money. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For starters, 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 a€" to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as divorce lawyer pleasant grove ut, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.