Subrogation is a concept that's well-known in legal and insurance circles but often not by the people who employ them. Even if you've never heard the word before, it would be to your advantage to comprehend the steps of the process. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you have is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions without unreasonable delay. If you get an injury on the job, 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 responsible for services or repairs is regularly a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a path to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
Your electric outlet catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the loss. The home has already been fixed up in the name of expediency, but your insurance company is out ten grand. 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 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For starters, if your insurance policy stipulated a deductible, your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, 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 at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as car accident attorney Rosedale MD, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth researching the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders updated as the case continues; 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 record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.