Subrogation is a concept that's understood among insurance and legal professionals but sometimes not by the people they represent. Rather than leave it to the professionals, it would be to your advantage to know the nuances of the process. The more you know, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair a€" and delay sometimes increases the damage to the policyholder a€" insurance firms usually decide to pay up front and figure out the blame later. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
You are in a highway accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, 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 to blame and his insurance should have paid for the repair of your auto. How does your insurance company get its funds back?
How Does Subrogation Work?
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 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 self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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.
Why Do I Need to Know This?
For one thing, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too a€" to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Divorce attorney orem ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth comparing the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements immediately 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, even attractive rates won't outweigh the eventual headache.