Subrogation is an idea that's well-known among legal and insurance companies but rarely by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If a hailstorm damages your property, for example, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to recoup the costs if, when all is said and done, they weren't actually in charge of the payout.
Let's Look at an Example
You are in a highway 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 to blame and her insurance policy should have paid for the repair of your car. How does your 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 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer 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 Does This Matter to Me?
For one thing, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. 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 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law 66061, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth measuring the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.