Subrogation is an idea that's understood among legal and insurance professionals but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it is in your self-interest to know an overview of how it works. The more information you have, 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 business on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair – and delay 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 method to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
You are in a highway 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 it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your company get its funds back?
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 insurance firms 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 insurance company is considered to have some of your rights in exchange for making good on 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 one thing, if you have a deductible, it wasn't just your insurance company that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, 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 at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price 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 attorneys 98501-1548, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth measuring the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their clients advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation 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.