Subrogation is a concept that's well-known among insurance and legal firms but sometimes not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the steps of how it works. The more information you have, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another in a timely fashion. If your property is burglarized, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting often compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to get back the costs if, when all is said and done, they weren't in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance information, 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 his insurance policy should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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.
Why Does This Matter to Me?
For starters, if your insurance policy stipulated a deductible, your insurance company 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by ballooning your premiums. On the other hand, if it has a capable legal team and goes after them efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 civil rights university place wa, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.