The Things Every Policy holder Ought to Know About Subrogation

Subrogation is an idea that's well-known in insurance and legal circles but often not by the people who employ them. Rather than leave it to the professionals, it would be to your advantage to understand the steps of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.

But since determining who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a means to get back the costs if, in the end, they weren't actually in charge of the expense.

Can You Give an Example?

Your electric outlet catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. The house has already been fixed up in the name of expediency, 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 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 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 to your person or property. But under subrogation law, your insurance company is considered to have 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.

Why Does This Matter to Me?

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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, depending on the laws in your state.

Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers compensation Paddock Lake, WI, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients updated as the case proceeds; 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, 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.