Subrogation is a concept that's understood in legal and insurance circles but rarely by the policyholders who employ them. Even if it sounds complicated, it would be to your advantage to understand the steps of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a confusing affair – and delay often increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a mechanism to regain the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
You are in an auto accident. Another car collided with yours. Police are called, 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 her insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self 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 Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total cost 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 Personal Injury Attorneys in Tacoma, WA, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their accountholders 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 insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.