Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend an overview of the process. The more you know, the better decisions you can make about your insurance company.
Every insurance policy you own is a commitment that, if something bad occurs, the company that insures the policy will make restitutions without unreasonable delay. If a storm damages your property, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay often compounds the damage to the victim – insurance firms often decide to pay up front and figure out the blame later. They then need a way to get back the costs if, once the situation is fully assessed, 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. Police are called, 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 entirely to blame and her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of 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, your insurer wasn't the only one that 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 timid on any subrogation case it might not win, it might choose to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. 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 to blame), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as divorce lawyer tumwater wa, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.