Subrogation is an idea that's understood among legal and insurance professionals but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it would be in your self-interest to understand an overview of the process. The more you know, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you own is a promise that, if something bad occurs, the company that covers the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a means to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Let's Look at an Example
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 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 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 insurance company is considered to have 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 Individuals?
For one thing, 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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss 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 slip & fall lawyer 99501, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth examining the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so fast; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.