Subrogation is an idea that's well-known among insurance and legal professionals but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Any insurance policy you have is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get injured on the job, for example, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is often a heavily involved affair – and delay sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame afterward. They then need a means to get back the costs if, in the end, they weren't responsible for the expense.
For Example
Your bedroom catches fire and causes $10,000 in house damages. Luckily, 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 a reasonable possibility that a judge would find him responsible for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm 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 companies 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 insurance company is considered to have 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 starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by upping your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is doing you a favor as well as itself. 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 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost 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 bonney lake WA attorneys, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth measuring the records of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.