Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to know an overview of the process. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay often adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Let's Look at an Example
Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. 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 accountable for the loss. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
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 insurance firms 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 to your self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of 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 a start, if you have 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by upping 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 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as workmans comp attorney Pasadena MD, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth examining the records of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.