Subrogation is a term that's understood among insurance and legal professionals but rarely by the customers 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 understand the nuances of the process. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is an assurance that, if something bad happens to you, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting often adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a method to get back the costs if, ultimately, they weren't responsible for the payout.
Can You Give 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 at fault and her insurance should have paid for the repair of your car. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 self or property. But under subrogation law, your insurance company is given some of your rights for having taken care of 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, 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 the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. 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 50 percent to blame), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Law office near Tacoma washington, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible 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 protecting its profitability by raising your premiums, you should keep looking.