Subrogation is a term that's understood among legal and insurance firms but often not by the people who employ them. Rather than leave it to the professionals, it is in your self-interest to know the nuances of how it works. The more you know, the more likely relevant proceedings will work out in your favor.
Every insurance policy you have is a commitment that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your real estate burns down, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a method to recoup the costs if, ultimately, they weren't actually responsible for the payout.
Can You Give an Example?
Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it takes care of the repair expenses. 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 accountable for the loss. You already have your money, 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 extended some of your rights in exchange for making good on 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 Individuals?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, 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 goes after them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss of an accident is over 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 child custody court Henderson Nv, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth researching the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their accountholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.