Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the customers who hire them. Even if you've never heard the word before, it is in your benefit to know the nuances of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Can You Give an Example?
Your garage catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him accountable for the damages. 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 Does Subrogation Work?
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 to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by upping your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all 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 at fault), you'll typically get $500 back, depending on your state laws.
Moreover, if the total price 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 catastrophic injury law firm Rosedale MD, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth examining the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.