Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the customers who employ them. Even if it sounds complicated, it would be in your self-interest to understand an overview of how it works. The more information you have about it, the better decisions you can make about your insurance company.
Every insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a method to get back the costs if, ultimately, they weren't responsible for the expense.
Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. You already have your money, 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 method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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 who 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 costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. 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 50 percent to blame), you'll typically get $500 back, depending on your state laws.
In addition, if the total price 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 family law services SLC UT, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients posted 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 insurance firm has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.