Subrogation is a term that's understood in insurance and legal circles but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to understand the nuances of the process. The more information you have about it, the better decisions you can make about your insurance policy.
Every insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If you get hurt at work, for instance, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often compounds the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame after the fact. They then need a means to regain the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You are in a highway accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, 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 at fault and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if you have 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, 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 one-half at fault), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 criminal defense attorney near me Provo UT, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth researching the records of competing agencies to find out whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.