Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people who employ them. Even if you've never heard the word before, it is in your benefit to know the steps of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.
An insurance policy you own is a promise that, if something bad occurs, the business that covers the policy will make restitutions in a timely fashion. If a windstorm damages your real estate, for instance, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame afterward. They then need a means to recover the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
Can You Give an 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 insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. You already have your money, 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 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 companies 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 to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that 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 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 knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full 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 your state laws.
Moreover, 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 Personal injury attorney Lithia springs, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.