Subrogation is a term that's understood in insurance and legal circles but often not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to know the steps of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, your employer'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 responsible for services or repairs is regularly a confusing affair – and delay sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a path to regain the costs if, when all is said and done, they weren't actually responsible for the expense.
For Example
Your living room catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency 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 insurance company is considered to have 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 a start, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them 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 at fault), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total price 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 bonney lake washington law offices, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.