Subrogation is a concept that's understood in legal and insurance circles but often not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to comprehend an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Your kitchen 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 liable for the damages. The home has already been repaired in the name of expediency, but your insurance company is out all that money. 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 when it pays out a claim that turned out not to be its responsibility. 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 done to your self or property. But under subrogation law, your insurer 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.
How Does This Affect the Insured?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by upping your premiums. On the other hand, if it has a capable legal team and pursues them efficiently, it is doing you a favor as well as itself. If all 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, depending on your state laws.
Additionally, if the total cost of an accident is more than 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 lawyers in immigration Sandy Ut, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.