The Things You Need to Know About Subrogation
Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the steps of how it works. The more you know about it, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If a blizzard damages your property, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting often compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
For Example
Your garage catches fire and causes $10,000 in home damages. Happily, 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 reason to believe that a judge would find him responsible for the loss. The home has already been fixed up in the name of expediency, but your insurance agency is out all that money. What does the agency 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 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 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 originally due to you, because it has covered the amount already.
How Does This Affect Me?
For starters, 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 have a stake in the outcome as well – 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. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. 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 to blame), you'll typically get $500 back, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as car accident lawyer Tacoma WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.