Subrogation is a term that's well-known among insurance and legal firms but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to know the nuances of the process. The more information you have about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If you get hurt while you're on the clock, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame after the fact. They then need a method to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Can You Give an Example?
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the damages. The house has already been fixed up in the name of expediency, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 to your self 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 Should I Care?
For starters, if you have a deductible, it wasn't just your insurance company that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total expense 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 dui 66061, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth contrasting the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders updated 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 insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.