What Every Policy holder Ought to Know About Subrogation
Subrogation is a term that's understood among insurance and legal professionals but often not by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to know the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If a windstorm damages your home, for example, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame afterward. They then need a method to regain the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in house damages. Happily, 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 reason to believe that a judge would find him liable for the loss. The house has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer 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 Me?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full 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.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as divorce law lacey wa, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth examining the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.