Subrogation is a term that's understood in insurance and legal circles but often not by the people they represent. Rather than leave it to the professionals, it is to your advantage to understand the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is a promise that, if something bad happens to you, the company that covers the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and delay often adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a way to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
For Example
Your stove catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. You already have your money, but your insurance agency is out $10,000. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given some of your rights 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 the Insured?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, 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.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury attorney Tacoma WA, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth weighing the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.