Subrogation is an idea that's well-known in legal and insurance circles but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand the steps of the process. The more you know, the better decisions you can make about your insurance company.
Every insurance policy you own is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in a timely fashion. If a windstorm damages your house, for example, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, in the end, they weren't actually responsible for the expense.
Your stove catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the loss. You already have your money, but your insurance agency is out ten grand. What does the agency 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 companies 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 insurer is given 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 Should I Care?
For one thing, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its losses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense 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 medical malpractice lawyers Mclean Va, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth comparing the records of competing firms to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers apprised as the case continues; 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 agency has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.