Subrogation is a concept that's understood among insurance and legal professionals but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to know the steps of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you hold is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely manner. If you get hurt while you're on the clock, for instance, your company'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 accountable for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame later. They then need a way to get back the costs if, when all is said and done, they weren't actually responsible for the expense.
Can You Give an Example?
You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance information, 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 at fault and her insurance should have paid for the repair of your car. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 considered to have some of your rights 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.
How Does This Affect Policyholders?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurer is timid on any subrogation case it might not win, it might choose to get back its losses by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense 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 Wrongful death attorney Bonney Lake, Wa, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the records of competing agencies to determine whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.