Subrogation is a term that's well-known among legal and insurance professionals but sometimes not by the people who hire them. Even if it sounds complicated, it is to your advantage to understand an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you have is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. If you get an injury while you're on the clock, for instance, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and delay often increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in house damages. Fortunately, 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 a reasonable possibility that a judge would find him liable for the loss. You already have your money, 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 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 person or property. But under subrogation law, your insurance company is considered to have 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.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by raising your premiums. On the other hand, if it has a capable 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Employment Lawyer Troy MI, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth comparing the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.