Subrogation is a concept that's well-known in legal and insurance circles but often not by the customers they represent. Even if it sounds complicated, it would be in your benefit to comprehend the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and delay often compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame after the fact. They then need a method to recover the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
Let's Look at an Example
Your living room 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 reason to believe that a judge would find him accountable for the damages. You already have your money, but your insurance company is out $10,000. What does the company 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by raising your premiums. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand 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 responsible), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal defense attorney Pleasant Grove UT, successfully press a subrogation case, 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 companies to determine if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements immediately 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 profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.