Subrogation is a term that's understood in insurance and legal circles but rarely by the customers they represent. Even if you've never heard the word before, it is in your benefit to know the steps of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you own is a promise that, if something bad occurs, the company that covers the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while you're on the clock, for instance, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay sometimes compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame later. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Let's Look at an Example
You are in an auto 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 entirely at fault and her insurance 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 process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 given some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For a start, if your insurance policy stipulated 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 lax about bringing subrogation cases to court, 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 enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as wrongful death lawyer Puyallup, Wa, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth contrasting the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.