Subrogation is an idea that's understood in insurance and legal circles but often not by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to know the nuances of how it works. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you have is a commitment that, if something bad happens to you, the business that covers the policy will make good in one way or another without unreasonable delay. If you get an injury while working, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting sometimes increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame later. They then need a mechanism to recoup the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at 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 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 his insurance policy should have paid for the repair of your car. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given 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 a start, if you have a deductible, your insurer 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is doing you a favor as well as itself. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost 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 practice near me, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth measuring the records of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders apprised 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, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.