Subrogation is a concept that's understood in legal and insurance circles 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 the steps of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your real estate suffers fire damage, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting often adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame later. They then need a method to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
Let's Look at an Example
You are in a vehicle accident. Another car crashed into 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 it's determined that the other driver was entirely to blame and his insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
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 done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, 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 one-half at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as employment lawyer tacoma wa, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth measuring the records of competing firms to determine if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.