Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to comprehend the steps of the process. The more you know, the more likely relevant proceedings will work out favorably.
Every insurance policy you hold is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt at work, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a method to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. 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 liable for the damages. The home 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 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 done to your self or property. But under subrogation law, your insurance company is extended some of your rights 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 a start, 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.
Additionally, 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 fathers custody rights henderson nv, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth weighing the records of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their policyholders informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.