Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers who employ them. Even if you've never heard the word before, it would be in your benefit to comprehend an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is an assurance that, if something bad occurs, the business that covers the policy will make good in a timely manner. If you get an injury while you're on the clock, for example, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a path to get back the costs if, when all is said and done, they weren't actually in charge of the expense.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in home damages. Fortunately, 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 reason to believe that a judge would find him to blame for the loss. The home has already been fixed up in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer 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 Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as Sumner WA attorneys, pursue subrogation and wins, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring 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.