Subrogation is an idea that's well-known among legal and insurance firms but often not by the policyholders who employ them. Even if you've never heard the word before, it would be in your benefit to know the nuances of the process. The more you know about it, the better decisions you can make about your insurance policy.
An insurance policy you own is a commitment that, if something bad happens to you, the business that covers the policy will make good in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to get back the costs if, ultimately, they weren't responsible for the expense.
Let's Look at an Example
You are in a vehicle accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely at fault and his insurance should have paid for the repair of your auto. How does your 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 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. Ordinarily, only you can sue for damages to your person 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 that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For one thing, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, 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 one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total expense of an accident is over 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 dwi attorney 23294, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.