Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If your home is burglarized, for example, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay in some cases compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers 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 firm is out ten grand. 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 payment 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 done to your person or property. But under subrogation law, your insurance company is considered to have 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 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 lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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.
Moreover, if the total loss 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 personal injury attorney Puyallup WA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing companies to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.