Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people they represent. Even if it sounds complicated, it is in your benefit to comprehend the steps of the process. The more you know about it, the better decisions you can make about your insurance policy.
Every insurance policy you have is a promise 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 your house is robbed, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a way to regain the costs if, once the situation is fully assessed, they weren't actually responsible for 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 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 at fault and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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.
How Does This Affect Policyholders?
For starters, 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by upping your premiums. On the other hand, if it has a capable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all ten grand 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 at fault), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury lawyers utah, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth measuring the records of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.