Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the people who hire them. Even if you've never heard the word before, it would be to your advantage to comprehend the nuances of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.
Any insurance policy you own is a commitment that, if something bad occurs, the company that covers the policy will make good in one way or another in a timely fashion. If your property is broken into, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay often compounds the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a method to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
For Example
Your living room catches fire and causes $10,000 in house damages. Happily, 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 reasonable possibility that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency 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 self or property. But under subrogation law, your insurance company 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.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by boosting your premiums. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 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 the laws in your state.
In addition, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as divorce attorney lacey wa, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers advised as the case continues; 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.