Subrogation is a term that's well-known among legal and insurance firms but sometimes not by the people they represent. Rather than leave it to the professionals, it is in your benefit to comprehend an overview of how it works. The more information you have, the more likely relevant proceedings will work out favorably.
Any insurance policy you hold is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If you get an injury while working, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance companies often decide to pay up front and figure out the blame later. They then need a means to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Your kitchen catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case 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 loss. You already have your money, but your insurance firm is out all that money. 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 reimbursement 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. 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 making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all of the money 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as auto accident lawyer Washington DC, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses 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 safeguarding its income by raising your premiums, you'll feel the sting later.