Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the customers who hire them. Even if you've never heard the word before, it is to your advantage to know an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is a promise that, if something bad occurs, the firm that covers the policy will make good without unreasonable delay. If your home burns down, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a way to regain the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. 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 loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Does Subrogation Work?
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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given 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.
Why Should I Care?
For starters, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as social security benefits attorney janesville, wi, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.