Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make restitutions in a timely fashion. If your real estate suffers fire damage, for instance, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a way to recover the costs if, when all is said and done, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a car accident. Another car crashed into 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 police tell the insurance companies that the other driver was entirely to blame and his insurance should have paid for the repair of your car. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, based on the laws in most states.
In addition, 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 child support lawyer 23294, 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 reputations of competing firms to find out whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements right away 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 paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.