The Things Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is an idea that's understood in legal and insurance circles but rarely by the people who hire them. Even if you've never heard the word before, it would be to your advantage to understand the steps of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you have is an assurance that, if something bad occurs, the firm on the other end of the policy will make good without unreasonable delay. If a blizzard damages your real estate, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.

Can You Give an Example?

Your bedroom catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the damages. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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 considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as child custody attorney Springville ut, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance agencies are not the same. When comparing, it's worth looking at the records of competing companies to determine whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.