Subrogation is a term that's well-known among legal and insurance companies but rarely by the customers they represent. Even if you've never heard the word before, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay sometimes compounds the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to get back the costs if, in the end, they weren't actually in charge of the expense.
For Example
Your electric outlet catches fire and causes $10,000 in home damages. Fortunately, 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 a decent chance that a judge would find him liable for the loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is given 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 Me?
For starters, if your insurance policy stipulated a deductible, your insurer 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full 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.
Moreover, 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 expensive. If your insurance company or its property damage lawyers, such as dui attorney 79101, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth researching the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.