Subrogation is a concept that's understood among insurance and legal companies but often not by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to understand the nuances of the process. The more you know about it, the better decisions you can make about your insurance policy.
An insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in a timely fashion. If you get an injury at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a means to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Fortunately, 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 responsible for the loss. The home 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 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. Usually, only you can sue for damages 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 originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as dwi attorney 23294, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth scrutinizing the records of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.