Subrogation is an idea that's understood among legal and insurance companies but sometimes not by the policyholders who hire them. Rather than leave it to the professionals, it is to your advantage to comprehend an overview of how it works. The more information you have about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your home is broken into, for example, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a way to regain the costs if, ultimately, they weren't actually in charge of the payout.
Your kitchen catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the loss. The home has already been fixed up in the name of expediency, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is given 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 the Insured?
For a start, 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 – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them enthusiastically, 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 to blame), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as personal injury law firm Tacoma WA, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the records of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; 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 funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.