Subrogation is an idea that's understood in insurance and legal circles but often not by the customers they represent. Even if you've never heard the word before, it is in your self-interest to know the steps of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. If a hailstorm damages your property, for instance, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, when all the facts are laid out, they weren't in charge of the payout.
For Example
You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your self 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.
Why Does This Matter to Me?
For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by raising your premiums. 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss 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 personal injury law firm Bonney Lake WA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth researching the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders informed 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 insurance agency has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.