Subrogation is a concept that's well-known among insurance and legal firms but rarely by the policyholders who employ them. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of how it works. The more information you have about it, the better decisions you can make about your insurance company.
Every insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your property is burglarized, for instance, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting often compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame afterward. They then need a means to regain the costs if, in the end, they weren't actually responsible for the payout.
Can You Give an Example?
You are in a car accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your car. How does your company get its money 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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 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 timid on any subrogation case it might not win, it might choose to recoup its expenses by increasing your premiums. On the other hand, if it has a capable legal team and goes after them aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full $1,000 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, depending on the laws in your state.
In addition, if the total price 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 drug attorney 79101, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth researching the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers updated as the case goes on; 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 firm has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.