Subrogation is a term that's well-known among legal and insurance companies but rarely by the customers who employ them. Rather than leave it to the professionals, it would be in your self-interest to know the steps of how it works. The more you know about it, the better decisions you can make with regard to your insurance company.
An insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies often opt to pay up front and figure out the blame afterward. They then need a means to recover the costs if, in the end, they weren't actually responsible for the expense.
For Example
You go to the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and she writes down your coverage details. You get stitched up and your insurance company is billed for the expenses. But on the following afternoon, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has a right to recover its money in some way.
How Subrogation Works
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 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 self or property. But under subrogation law, your insurance company 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 one thing, if you have a deductible, it wasn't just your insurance company 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 expenses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them 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 one-half accountable), you'll typically get $500 back, depending on your state laws.
In addition, 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 family law services Olympia, WA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth weighing the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.