Subrogation is a concept that's well-known among legal and insurance firms but rarely by the policyholders who hire them. Rather than leave it to the professionals, it would be in your benefit to know the nuances of the process. The more you know about it, the better decisions you can make about your insurance company.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm that insures the policy will make good in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is sometimes a confusing affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a path to recover the costs if, when all the facts are laid out, they weren't responsible for the payout.
Can You Give an Example?
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your insurance company get its money back?
How Does Subrogation Work?
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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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 Should I Care?
For a start, 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 lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by ballooning your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 workers compensation insurance quote Purcellville, VA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth contrasting the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding 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.