What You Need to Know About Subrogation <br/> <br/>
Subrogation is a concept that's understood in legal and insurance circles but often not by the customers they represent. 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, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you own is a commitment that, if something bad occurs, the firm that covers the policy will make good without unreasonable delay. If your house is burglarized, for instance, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a way to regain the costs if, when all is said and done, they weren't actually in charge of the expense.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance company is out ten grand. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 to your person or property. But under subrogation law, your insurer is considered to have 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 Individuals?
For a start, if you have 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, 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 spendy. If your insurance company or its property damage lawyers, such as Law office near bonney lake washington, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth contrasting the reputations of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.