Subrogation is a term that's well-known among insurance and legal firms but rarely by the people who hire them. Even if you've never heard the word before, it is to your advantage to know the nuances of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay in some cases compounds 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 means to recover the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Can You Give an Example?
Your living room catches fire and causes $10,000 in house damages. Luckily, 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 to blame for the damages. You already have your money, 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 payment when it pays out a claim that turned out not to be its responsibility. 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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.
Why Do I Need to Know This?
For a start, 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 costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss 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 lawyer for child custody Springville ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth measuring the records of competing companies to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.