Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to know the steps of the process. The more you know, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay sometimes increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
For Example
Your electric outlet catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the loss. The house has already been repaired in the name of expediency, but your insurance company is out ten grand. 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 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights 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 Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 insurance company is timid on any subrogation case it might not win, it might opt to get back its losses by ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury law firm Tacoma WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients informed 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 insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.