Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers who hire them. Even if you've never heard the word before, it would be in your self-interest to comprehend the nuances of how it works. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good without unreasonable delay. If your home is burglarized, for example, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms often opt to pay up front and assign blame afterward. They then need a path to get back the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You are in a vehicle accident. Another car ran into yours. Police are called, you exchange insurance information, 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 at fault and her insurance should have paid for the repair of your vehicle. How does your insurance 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 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights 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 Policyholders?
For one thing, 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 ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases enthusiastically, 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 one-half accountable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as Lawyers serving bonney lake wa, pursue subrogation and wins, 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 companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding 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 covering its income by raising your premiums, you should keep looking.