Subrogation is a term that's well-known in legal and insurance circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to understand an overview of the process. The more you know about it, the better decisions you can make about your insurance policy.
Any insurance policy you own is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If a hailstorm damages your home, for instance, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is typically a heavily involved affair – and delay often compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, when all is said and done, they weren't in charge of the expense.
For Example
Your stove catches fire and causes $10,000 in home damages. Happily, 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 decent chance that a judge would find him liable for the loss. The house has already been fixed up in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer 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 Individuals?
For a start, if you have a deductible, it wasn't just your insurer 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 insurer is timid on any subrogation case it might not win, it might opt to get back its expenses by raising your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. 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 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody lawyer boulder city Nv, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the reputations of competing firms to determine if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.