Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers who employ them. Even if it sounds complicated, it is to your advantage to understand an overview of the process. The more information you have about it, the better decisions you can make about your insurance policy.
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 in a timely fashion. If you get hurt on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a mechanism to recover the costs if, ultimately, they weren't actually responsible for the payout.
For Example
Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the damages. The house 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 Subrogation Works
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
For one thing, if your insurance policy stipulated 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is more than 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 criminal defense law Springville UT, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients updated as the case continues; 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 protecting its income by raising your premiums, you should keep looking.