Subrogation is a concept that's well-known among insurance and legal companies but sometimes not by the people they represent. Even if you've never heard the word before, it would be to your advantage to understand the steps of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and delay often compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a path to recover the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
Your garage catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, in its investigation it 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. You already have your money, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
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 to your person or property. But under subrogation law, your insurer 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.
Why Does This Matter to Me?
For one thing, 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 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 choose to recoup its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as civil rights federal way wa, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.