Subrogation is an idea that's well-known among legal and insurance professionals but often not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand the steps of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you have is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If your house burns down, for instance, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the damages. You already have your money, 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 process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have some of your rights 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 Policyholders?
For starters, 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 lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, 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 discrimination attorney federal way wa, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the records of competing firms to evaluate whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding 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 protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.