Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the people who employ them. Even if it sounds complicated, it would be to your advantage to understand the nuances of the process. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you own is an assurance that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely fashion. If you get an injury while working, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame after the fact. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case 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 damages. You already have your money, but your insurance firm is out $10,000. 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 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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 Should I Care?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 family law lawyers near me Salt Lake City UT, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth researching the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.