Subrogation is a concept that's well-known among legal and insurance firms but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to comprehend the steps of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If you get hurt while working, for instance, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is often a time-consuming 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 after the fact. They then need a mechanism to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car crashed into 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 her insurance should have paid for the repair of your car. How does your insurance 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 reimbursement 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer 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 Should I Care?
For starters, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as patent litigation attorney 77092, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.