Subrogation is an idea that's understood among insurance and legal professionals but often not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to understand an overview of how it works. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in a timely manner. If you get injured while working, for instance, your company'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 sometimes a time-consuming affair – and delay often increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a method to regain the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the damages. The house has already been fixed up in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
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 insurance company is considered to have some of your rights 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 the Insured?
For one thing, if you have 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 losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total price 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 employment lawyer 98466, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth contrasting the records of competing firms to evaluate if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.