Subrogation is a term that's understood among insurance and legal firms but rarely by the people they represent. Even if you've never heard the word before, it is in your self-interest to understand the nuances of the process. The more information you have, the better decisions you can make about your insurance policy.
An insurance policy you hold is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If you get an injury while working, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes 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 path to recoup the costs if, ultimately, they weren't actually responsible for the expense.
For Example
You are in an auto accident. Another car collided with 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 to blame and her insurance policy 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 way 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. 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 having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if your insurance policy stipulated 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. 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 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Lawyers serving Sumner wa, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing companies to evaluate whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their clients apprised 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 insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.