Subrogation is a term that's understood in legal and insurance circles but sometimes not by the customers they represent. Even if you've never heard the word before, it is to your advantage to comprehend the steps of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you own is an assurance that, if something bad occurs, the company that covers the policy will make good in one way or another without unreasonable delay. If your home is burglarized, for example, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair a€" and time spent waiting often increases the damage to the victim a€" insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, when all the facts are laid out, they weren't responsible for the payout.
Can You Give an Example?
Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. 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 accountable for the loss. 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have 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 a€" to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, 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 accountable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Divorce attorney spanish fork UT, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth examining the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.