Subrogation is an idea that's understood among insurance and legal professionals but sometimes not by the customers who hire them. Even if it sounds complicated, it would be to your advantage to know the nuances of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If a blizzard damages your house, for instance, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and delay often adds to the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, when all the facts are laid out, they weren't in charge of the expense.
You are in a car accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your car. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights 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 Does This Matter to Me?
For a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums and call it a day. 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 ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, depending on the laws in your state.
In addition, 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 how do i find a real estate lawyer Williams Bay, WI, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth researching the records of competing firms to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.