Subrogation is a concept that's understood among insurance and legal firms but rarely by the people they represent. Even if it sounds complicated, it is in your benefit to understand the nuances of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you hold is a promise that, if something bad occurs, the company that covers the policy will make good in a timely fashion. If your real estate suffers fire damage, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a method to recover the costs if, ultimately, they weren't responsible for the expense.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his 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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given 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 the Insured?
For one thing, if you have a deductible, it wasn't just your insurance company 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 insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by ballooning your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. 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 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as family law attorney Tumwater, WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients advised as the case continues; 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 income by raising your premiums, even attractive rates won't outweigh the eventual headache.