Subrogation is a term that's well-known among legal and insurance professionals but rarely by the people who hire them. Rather than leave it to the professionals, it would be to your advantage to understand the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance pays out.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and time spent waiting often adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, ultimately, they weren't actually in charge of the expense.
Can You Give an Example?
Your electric outlet catches fire and causes $10,000 in home 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 decent chance that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?
How Does Subrogation Work?
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 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 in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. 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, depending on the laws in your state.
Additionally, if the total loss 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 Springville ut, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the records of competing firms to find out whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their account holders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.