Subrogation is an idea that's well-known among legal and insurance professionals but rarely by the customers they represent. Even if it sounds complicated, it is in your self-interest to understand the steps of how it works. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
For Example
Your living room catches fire and causes $10,000 in house damages. Luckily, 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 a decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance agency is out all that money. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 price 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 family law firm Vancouver WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking up the reputations of competing companies to determine whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients advised 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, on the other hand, an insurance company 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.