Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to know the steps of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.
Every insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make good in one way or another without unreasonable delay. If your real estate burns down, for example, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting often compounds the damage to the victim – insurance firms often decide to pay up front and assign blame afterward. They then need a method to recoup the costs if, in the end, they weren't actually in charge of the payout.
Let's Look at an Example
You are in a traffic-light accident. Another car ran into 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 police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect Me?
For starters, if you have a deductible, your insurance company wasn't the only one that 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as personal injury lawyer Tacoma WA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking up the records of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers advised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.