Subrogation is a concept that's well-known among insurance and legal firms but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to know an overview of how it works. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you own is an assurance that, if something bad occurs, the firm that covers the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and delay in some cases compounds the damage to the victim – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a way to get back the costs if, when all is said and done, they weren't in charge of the expense.
Can You Give an Example?
You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance details, 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 to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
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 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 self or property. But under subrogation law, your insurance company is given 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 the Insured?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by upping 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 $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total loss 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 lacey wa, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not created equal. When comparing, it's worth contrasting the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.