Subrogation is a concept that's understood among insurance and legal professionals but rarely by the people who hire them. Rather than leave it to the professionals, it would be in your self-interest to understand the steps of the process. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you have is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another in a timely manner. If your house is broken into, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies often decide to pay up front and assign blame after the fact. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
For Example
Your living room catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the loss. The house has already been fixed up in the name of expediency, but your insurance company is out ten grand. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that 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 choose to recover its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, depending on your state laws.
Moreover, if the total loss 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 accidental death lawyer Frederick MD, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth researching the reputations of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.
