Subrogation and How It Affects Your Insurance Policy
Subrogation is a concept that's understood in insurance and legal circles but often not by the people who hire them. Even if you've never heard the word before, it is in your self-interest to understand an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you own is an assurance that, if something bad happens to you, the firm that covers the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy affair – and time spent waiting often increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a means to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
For Example
Your stove catches fire and causes $10,000 in house damages. Fortunately, 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 loss. The home has already been repaired in the name of expediency, but your insurance firm is out ten grand. 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 reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them aggressively, it is doing you a favor as well as itself. 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 one-half to blame), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as attorney office Puyallup , WA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.
attorney office Puyallup , WA