Subrogation is a concept that's understood among insurance and legal professionals but sometimes not by the people they represent. Even if it sounds complicated, it is in your benefit to know the nuances of the process. The more you know about it, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. 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 tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame afterward. They then need a way to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Luckily, 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 reason to believe that a judge would find him liable for the damages. You already have your money, but your insurance company is out all that money. What does the company 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 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 done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by raising your premiums. On the other hand, if it has a capable legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total cost 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 personal injury attorney Tacoma WA, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth measuring the records of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.