Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the policyholders who hire them. Even if you've never heard the word before, it is in your self-interest to comprehend the steps of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad occurs, the business that insures the policy will make restitutions in a timely manner. If you get injured at work, your company's workers compensation insurance 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 time spent waiting in some cases increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a method to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. The house has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Does Subrogation Work?
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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights 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.
How Does This Affect Policyholders?
For one thing, if your insurance policy stipulated 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 insurance company is lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, 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 accountable), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as medical lawyer Washington DC, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing companies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.