Subrogation is a term that's understood among legal and insurance firms but sometimes not by the people who hire them. Rather than leave it to the professionals, it is in your benefit to understand an overview of how it works. The more information you have, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get hurt while working, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting often compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in home 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 reasonable possibility that a judge would find him accountable for the damages. You already have your money, but your insurance agency is out $10,000. What does the agency 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 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 done to your person or property. But under subrogation law, your insurance company is considered to have 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.
Why Do I Need to Know This?
For starters, if you have 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them aggressively, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total expense of an accident is over 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 law firm salt lake city ut, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the reputations of competing companies to determine if they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.