Subrogation is a term that's well-known among insurance and legal professionals 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 in your benefit to know an overview of the process. The more information you have, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in a timely fashion. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay often compounds the damage to the victim – insurance firms often opt to pay up front and assign blame later. They then need a way to recover the costs if, in the end, they weren't actually responsible for the expense.
Can You Give an Example?
You are in an auto 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 that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and his insurance should have paid for the repair of your car. How does your company get its funds back?
How Does Subrogation Work?
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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company 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.
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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as civil rights lawyer University Place WA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth scrutinizing the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.