Subrogation is a term that's well-known among insurance and legal firms but often not by the policyholders who employ them. Even if you've never heard the word before, it would be in your self-interest to comprehend an overview of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Any insurance policy you own is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. If your house suffers fire damage, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a mechanism to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
For Example
You are in a highway accident. Another car collided with 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 at fault and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, 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 making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For starters, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Auto Accident Attorney Sumner WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth examining the records of competing agencies to determine if they pursue winnable subrogation claims; if they do so fast; if they keep their policyholders informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.