Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it is to your advantage to understand an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out in your favor.
Every insurance policy you hold is a promise that, if something bad occurs, the business that covers the policy will make restitutions in one way or another in a timely fashion. If you get an injury at work, for example, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame later. They then need a means to recover the costs if, ultimately, they weren't actually in charge of the payout.
You are in a highway accident. Another car crashed into yours. Police are called, 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 his insurance policy should have paid for the repair of your auto. How does your company get its money back?
How Subrogation Works
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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by raising your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases 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 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury attorney reston, va, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth looking up the records of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 covering its profit margin by raising your premiums, you'll feel the sting later.