Subrogation is a term that's understood among legal and insurance firms but often not by the policyholders who employ them. Rather than leave it to the professionals, it would be to your advantage to comprehend the nuances of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you have is a promise that, if something bad occurs, the firm that covers the policy will make restitutions without unreasonable delay. If you get an injury while working, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance companies usually decide to pay up front and figure out the blame later. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a car accident. Another car collided with yours. The police show up to assess the situation, 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 to blame and his insurance should have paid for the repair of your auto. How does your 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. Normally, only you can sue for damages done to your self 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
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 lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full 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 over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as personal injury attorney Tacoma WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers advised as the case proceeds; 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, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.