Subrogation and How It Affects Policyholders
Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand an overview of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
An insurance policy you have is a commitment that, if something bad occurs, the business that covers the policy will make good in one way or another in a timely manner. If a windstorm damages your property, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and delay in some cases compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a path to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
For Example
Your kitchen catches fire and causes $10,000 in home 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 decent chance that a judge would find him accountable for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Normally, 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 that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, if you have a deductible, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by increasing your premiums. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all 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 culpable), you'll typically get $500 back, based on the laws in most states.
Additionally, 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 attorney for child custody Springville ut, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth scrutinizing the records of competing companies to find out if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their account holders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.