Subrogation is a concept that's understood among insurance and legal firms but sometimes not by the policyholders they represent. Even if it sounds complicated, it is in your self-interest to know an overview of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your property is robbed, for instance, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a way to get back the costs if, when all is said and done, they weren't actually responsible for the expense.
Can You Give 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 entirely at fault and his insurance should have paid for the repair of your auto. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given 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 Me?
For a start, 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. 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 50 percent culpable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as getting a divorce with kids Lindon ut, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth scrutinizing the records of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.