Subrogation is an idea that's understood among insurance and legal firms but often not by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to know the nuances of how it works. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad occurs, the company that insures the policy will make good in one way or another in a timely fashion. If you get an injury on the job, your company'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 responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting often adds to the damage to the victim – insurance companies in many cases decide to pay up front and assign blame later. They then need a means to recoup the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator 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 house has already been repaired in the name of expediency, but your insurance company is out ten grand. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is given some of your rights in exchange 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 Should I Care?
For one thing, 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its costs by increasing 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 of the money 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 to blame), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total cost 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 Wrongful death attorney Tacoma, Wa, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their policyholders posted as the case goes on; 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 insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.