Subrogation is an idea that's well-known among legal and insurance companies but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand an overview of how it works. The more you know about it, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is a promise that, if something bad happens to you, the company on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is often a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance companies often decide to pay up front and assign blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
You are in a highway accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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 given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 lax about bringing subrogation cases to court, 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 aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost 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 auto accident lawyer Rosedale MD, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing agencies to find out if they pursue legitimate subrogation claims; if they do so quickly; if they keep their policyholders advised 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.