Subrogation is an idea that's well-known among legal and insurance companies but sometimes not by the customers who employ them. Even if it sounds complicated, it would be to your advantage to comprehend the nuances of how it works. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another in a timely manner. If a hailstorm damages your real estate, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a mechanism to get back the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home 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 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 Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums. On the other hand, if it has a competent legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as insurance claims attorney Tacoma, WA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth comparing the reputations 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 accountholders 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, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.