Subrogation is a concept that's understood among insurance and legal professionals but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your benefit to comprehend the steps of the process. The more information you have 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 firm on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is often a confusing affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a means to recoup the costs if, when all is said and done, they weren't responsible for the expense.
Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the loss. You already have your money, 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 payment when it pays out a claim that turned out not to be its responsibility. 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 having taken care of 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 one thing, if you have 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, 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 one-half responsible), you'll typically get $500 back, depending on your state laws.
Moreover, if the total expense of an accident is more than 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 washington law offices, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the records of competing firms to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements right away 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 profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.