Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the nuances of how it works. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured while you're on the clock, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and delay in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
For Example
You are in a traffic-light 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 at fault and his insurance should have paid for the repair of your auto. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
For one thing, if you have a deductible, it wasn't just your insurance company 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 choose to get back its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law services Vancouver WA, pursue subrogation and succeeds, it will recover your costs 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 if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away 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 safeguarding its profit margin by raising your premiums, you'll feel the sting later.