Subrogation is an idea that's understood among insurance and legal professionals but often not by the customers who employ them. Even if you've never heard the word before, it is to your advantage to know an overview of the process. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay sometimes increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an 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 to blame and his insurance should have paid for the repair of your auto. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of 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 your insurance policy stipulated a deductible, it wasn't just your insurer that 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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 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 to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as discrimination attorney tacoma wa, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing firms to evaluate if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses 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 profit margin by raising your premiums, you'll feel the sting later.