Subrogation is a concept that's well-known among insurance and legal professionals but sometimes not by the customers who employ them. Even if it sounds complicated, it is in your benefit to understand the steps of how it works. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If you get an injury on the job, your employer's workers compensation insurance pays out 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 often a confusing affair – and delay in some cases adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
Your garage catches fire and causes $10,000 in home damages. Luckily, 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 repaired in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurer 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.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total cost 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 personal injury lawyer Sumner WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible 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 profitability by raising your premiums, you'll feel the sting later.