Subrogation is a concept that's well-known in insurance and legal circles but rarely by the people they represent. Even if you've never heard the word before, it would be to your advantage to understand the nuances of the process. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is a promise that, if something bad happens to you, the firm that insures the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. The home has already been fixed up in the name of expediency, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 person or property. But under subrogation law, your insurer is extended 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.
Why Do I Need to Know This?
For one thing, if you have a deductible, it wasn't just your insurer 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), 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 lawyer office payson ut, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth contrasting the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so fast; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.