Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the nuances of the process. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely fashion. If your real estate suffers fire damage, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
Your kitchen catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the damages. The house 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 Does Subrogation Work?
This is where subrogation comes in. It is the way 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 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 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. 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 one-half at fault), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price 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 criminal defense lawyer Springville UT, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth comparing the reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so with some expediency; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.