Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Your electric outlet 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 finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange 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.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, 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 half your deductible back, depending on your state laws.
Moreover, if the total expense 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 fathers rights attorney Boulder City nv, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the records of competing companies to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.