Subrogation is an idea that's understood among legal and insurance firms but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is an assurance that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If you get hurt on the job, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a confusing affair – and delay sometimes compounds the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a way to recoup the costs if, when all is said and done, they weren't responsible for the payout.
Can You Give an Example?
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. 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 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 to your person or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect Individuals?
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 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 choose to recover its costs by boosting your premiums. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 one-half to blame), you'll typically get $500 back, depending on your state laws.
Additionally, if the total expense 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 personal injury attorney reston, va, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing companies to find out if they pursue winnable subrogation claims; if they do so quickly; if they keep their clients updated as the case goes on; 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 honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.