Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand the nuances of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely manner. If you get hurt while you're on the clock, for instance, your employer's workers compensation insurance pays out 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 usually a tedious, lengthy affair – and time spent waiting often increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
For Example
Your bedroom catches fire and causes $10,000 in house damages. Luckily, 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 decent chance that a judge would find him accountable for the loss. The house has already been fixed up in the name of expediency, but your insurance firm is out $10,000. What does the firm 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that 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 upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 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, based on the laws in most states.
Moreover, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as child custody law firm boulder city Nv, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth comparing the records of competing companies to find out if they pursue valid subrogation claims; if they do so quickly; if they keep their customers updated as the case proceeds; 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 insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.