Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your benefit to know the steps of how it works. The more you know, the more likely relevant proceedings will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in a timely fashion. If your vehicle is hit, insurance adjusters (and police, 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 often a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to get back the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Let's Look at an Example
Your kitchen catches fire and causes $10,000 in home 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 reason to believe that a judge would find him to blame for the damages. You already have your money, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 done to your self or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, 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 chapter 7 bankruptcy 83101, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking at the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.