Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the customers who hire them. Even if you've never heard the word before, it is in your self-interest to know the steps of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If a storm damages your property, for example, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a method to recover the costs if, in the end, they weren't actually in charge of the expense.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Luckily, 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 to blame for the damages. The home has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
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. Ordinarily, only you can sue for damages to your person 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, 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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by raising your premiums. On the other hand, if it knows which cases it is owed 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 one-half responsible), you'll typically get $500 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 spendy. If your insurance company or its property damage lawyers, such as Wrongful death attorney Puyallup, Wa, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.