Subrogation is an idea that's well-known in legal and insurance circles but often not by the customers who hire them. Even if you've never heard the word before, it would be in your self-interest to comprehend the steps of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Any insurance policy you hold is a commitment that, if something bad occurs, the company that covers the policy will make restitutions without unreasonable delay. If you get an injury at work, for instance, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a path to get back the costs if, ultimately, they weren't responsible for the expense.
Your stove catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. 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 responsible for the damages. The home has already been fixed up in the name of expediency, 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have 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.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by ballooning 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 $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost 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 child custody attorney Springville ut, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth contrasting the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their account holders informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.