Subrogation is a concept that's well-known in insurance and legal circles but rarely by the policyholders who employ them. Rather than leave it to the professionals, it is in your benefit to know an overview of the process. The more information you have about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured while you're on the clock, for example, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting often adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Let's Look at an Example
Your kitchen catches fire and causes $10,000 in home 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 reason to believe that a judge would find him to blame for the damages. The house 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 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have 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 Individuals?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 lax about bringing subrogation cases to court, it might opt to get back its expenses by increasing your premiums. On the other hand, if it has a capable legal team and pursues 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 responsible), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as injury attorney glen burnie, md, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth measuring the records of competing companies to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.