Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If a fire damages your property, for example, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an Example
You are in a car accident. Another car ran into 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 at fault and her insurance should have paid for the repair of your auto. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have 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 starters, if you have a deductible, it wasn't just your insurer 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 opt to get back its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total cost 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 Family law Las Vegas NV, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking at the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.