Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know the steps of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.
An insurance policy you hold is an assurance that, if something bad occurs, the insurer of 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 regularly a heavily involved affair – and time spent waiting often adds to 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 recover the costs if, ultimately, they weren't actually responsible for the expense.
Your living room catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe 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 ten grand. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money 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 insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all of the money 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, depending on the laws in your state.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as workers compensation coverage Manassas, VA, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.