Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the customers who employ them. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Every insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the loss. The home has already been fixed up in the name of expediency, but your insurance firm is out ten grand. 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 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 extended 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.
How Does This Affect the Insured?
For starters, if you have a deductible, your insurance company wasn't the only one who 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases aggressively, it is doing you a favor as well as itself. 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 one-half at fault), you'll typically get $500 back, depending on your state laws.
In addition, if the total price 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 family law provo, ut, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.