Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the policyholders they represent. Even if you've never heard the word before, it would be in your self-interest to know the nuances of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in a timely fashion. If your property burns down, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a path to recover the costs if, ultimately, they weren't responsible for the expense.
Let's Look at an Example
Your garage catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. You already have your money, but your insurance firm is out ten grand. 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 after it has paid for something that should have been paid by some other entity. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights 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 Me?
For starters, if your insurance policy stipulated 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, 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 family law practice near me Vancouver WA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth examining the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.