Subrogation is an idea that's understood among legal and insurance companies but rarely by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your house suffers fire damage, for instance, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a means to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Can You Give an Example?
Your living room catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. You already have your money, but your insurance firm is out $10,000. 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 payment after it has paid for something that should have been paid by some other entity. 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 done to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 Me?
For starters, if your insurance policy stipulated a deductible, your insurer 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 insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by boosting your premiums. On the other hand, if it has a proficient legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as child custody law firm boulder city Nv, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance company 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.