Subrogation is an idea that's understood among legal and insurance professionals but sometimes not by the policyholders they represent. Even if it sounds complicated, it is to your advantage to know the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is an assurance that, if something bad occurs, the company that insures the policy will make good without unreasonable delay. If you get injured at work, for instance, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is often a confusing affair – and delay often increases the damage to the victim – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, ultimately, they weren't actually responsible for the payout.
For Example
Your living room catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. You already have your money, but your insurance company is out ten grand. What does the company 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. Normally, only you can sue for damages done 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.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all 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 your state laws.
In addition, if the total cost 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 insurance claims attorney Tacoma, WA, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the reputations of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.