Subrogation is a concept that's understood among insurance and legal firms but rarely by the people who employ them. Even if you've never heard the word before, it is in your self-interest to understand an overview of how it works. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If your house suffers fire damage, for instance, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a means to recover the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance 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 all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your self 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For starters, if you have a deductible, your insurer wasn't the only one 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 timid on any subrogation case it might not win, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, 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 responsible), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost 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 attorneys for disability claims paddock lake wi, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing firms to determine whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders advised 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 record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.attorneys for disability claims paddock lake wi