Subrogation is a concept that's understood among legal and insurance professionals but sometimes not by the customers they represent. Even if it sounds complicated, it would be to your advantage to understand the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.

An insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your home is robbed, for instance, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair a€" and time spent waiting sometimes compounds the damage to the victim a€" insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a method to regain the costs if, ultimately, they weren't responsible for the payout.

For Example

Your stove catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case 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 repaired in the name of expediency, but your insurance company is out $10,000. What does the company 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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended some of your rights 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 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 a€" to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its costs by raising 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total cost 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 Divorce law provo ut, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth comparing the reputations of competing agencies to determine 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 quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.