Subrogation is a term that's understood in legal and insurance circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of how it works. The more you know about it, the more likely relevant proceedings will work out in your favor.
An insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make good in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to recover the costs if, when all is said and done, they weren't in charge of the expense.
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. 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 to blame for the loss. The house has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 person or property. But under subrogation law, your insurer is given some of your rights 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.
How Does This Affect Policyholders?
For one thing, if your insurance policy stipulated 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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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 $500 back, based on the laws in most states.
Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as wrongful death lawyer Sumner, Wa, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth contrasting the records of competing companies to find out whether they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders advised as the case proceeds; 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 profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.