Subrogation is a term that's understood among legal and insurance firms but sometimes not by the people they represent. Rather than leave it to the professionals, it would be in your self-interest to know the steps of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is a commitment that, if something bad occurs, the company on the other end of the policy will make good without unreasonable delay. If you get hurt at work, for instance, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay sometimes adds to the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
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 information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and her insurance should have paid for the repair of your auto. How does your insurance 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 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights 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 a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by raising your premiums. On the other hand, if it has a capable legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total price 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 business law springville ut, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth weighing the records of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.