Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the people who employ them. Even if you've never heard the word before, it is in your benefit to know the nuances of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you hold is a promise that, if something bad happens to you, the firm that insures the policy will make restitutions without unreasonable delay. If you get hurt while you're on the clock, your employer's workers compensation pays out 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 often a heavily involved affair – and delay often compounds the damage to the policyholder – insurance companies in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to get back the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
Your living room catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on 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 your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – 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 upping your premiums. On the other hand, if it knows which cases it is owed and goes after 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as personal injury attorney reston, va, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking up the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they do so without delay; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.