Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it is in your benefit to know the steps of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is a commitment that, if something bad happens to you, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often adds to the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a path to recoup the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. The house has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
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 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 insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money 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, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them 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 accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss 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 lawyer for child custody Lindon ut, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth scrutinizing the reputations of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders updated 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 reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.