Subrogation is an idea that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it would be to your advantage to know the steps of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely manner. If you get injured on the job, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. You already have your money, 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 way 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights 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 Me?
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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as child custody lawyer boulder city Nv, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth looking at the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.