Subrogation is a term that's understood in insurance and legal circles but rarely by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to understand the steps of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If you get injured at work, for instance, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a means to get back the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Can You Give an Example?
Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. The house has already been repaired in the name of expediency, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Under ordinary circumstances, 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 making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
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 – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by boosting your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand 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 at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as patent lawyer 77092, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the reputations of competing companies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses 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 protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.