Subrogation is an idea that's understood in insurance and legal circles but often 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 benefit to know the steps of how it works. The more information you have, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you have is a promise that, if something bad happens to you, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your home is broken into, your property insurance steps in to pay 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 regularly a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms often decide to pay up front and figure out the blame afterward. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't responsible for the expense.
You are in an auto 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 police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your car. 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 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. 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 making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For starters, if you have a deductible, it wasn't just your insurance company that 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by ballooning your premiums. On the other hand, if it has a competent legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.
In addition, 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 family law attorney 99501, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth comparing the records of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their account holders updated as the case goes on; 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, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.