Subrogation is a term that's understood among insurance and legal companies but often not by the customers who hire them. Even if you've never heard the word before, it would be to your advantage to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a commitment that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If you get an injury at work, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a means to recover the costs if, in the end, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a traffic-light accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies 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 Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages done 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 that was 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, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 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, based on the laws in most states.
Furthermore, if the total expense 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 immigration law firm Magna Ut, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to determine whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, 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.