What Every Policy holder Ought to Know About Subrogation
Subrogation is a term that's understood among legal and insurance professionals 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 how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If a blizzard damages your property, for instance, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is often a confusing affair a€" and delay in some cases adds to the damage to the victim a€" insurance companies often opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
Your living room catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. 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. You already have your money, but your insurance firm is out ten grand. What does the firm do next?
How Does Subrogation Work?
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. Usually, only you can sue for damages done to your person 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, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well a€" to be precise, $1,000. If your insurer 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 has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, 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 worker compensation terms Alpharetta GA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth examining the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.