Subrogation and How It Affects Your Insurance Policy
Subrogation is an idea that's understood among legal and insurance professionals but sometimes not by the people who hire them. Rather than leave it to the professionals, it would be in your benefit to understand the steps of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is an assurance that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury at work, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and delay sometimes adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a means to get back the costs if, in the end, they weren't responsible for the expense.
For Example
Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given 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 insurance company 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar 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, based on the laws in most states.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as lawyers in immigration Sandy Ut, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth scrutinizing the reputations of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.