Subrogation is a concept that's well-known among insurance and legal companies but often not by the policyholders who employ them. Rather than leave it to the professionals, it is in your self-interest to know an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your home is burglarized, for instance, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 done to your person or property. But under subrogation law, your insurer is extended 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 starters, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as medical malpractice Mclean Va, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers updated as the case continues; 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 paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.