Subrogation is a concept that's understood among legal and insurance professionals but often not by the customers they represent. Rather than leave it to the professionals, it would be in your benefit to understand an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another in a timely manner. If you get an injury while working, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a highway 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 it's determined that the other driver was at fault and her insurance policy should have paid for the repair of your car. 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 after it has paid for something that should have been paid by some other entity. 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 insurance company is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, your insurance company 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 be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by raising 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 doing you a favor as well as itself. If all is recovered, you will get your full $1,000 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, based on the laws in most states.
Furthermore, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Law office near bonney lake washington, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth weighing the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their clients informed as the case continues; 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.