Subrogation is a term that's understood in legal and insurance circles but often not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions without unreasonable delay. If your real estate burns down, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a path to recover the costs if, when all is said and done, they weren't actually in charge of the payout.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. The house has already been repaired in the name of expediency, but your insurance firm is out ten grand. What does the firm 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 recover its losses by boosting your premiums. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 $500 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. If your insurance company or its property damage lawyers, such as bonney lake WA attorneys, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth scrutinizing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.