Subrogation is a concept that's understood among insurance and legal companies but rarely by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to know the steps of how it works. The more you know, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad occurs, the firm on the other end of the policy will make good in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay in some cases increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a mechanism to recoup the costs if, in the end, they weren't in charge of the expense.
Can You Give an Example?
Your stove catches fire and causes $10,000 in home damages. Luckily, 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 reason to believe that a judge would find him responsible for the damages. 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 method that an insurance company uses to claim reimbursement 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. Usually, 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 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 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all 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 responsible), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total loss 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 Legal representation for Sumner WA Residents, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money 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 safeguarding its bottom line by raising your premiums, you should keep looking.