Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the people they represent. Even if you've never heard the word before, it would be to your advantage to know the steps of how it works. The more you know about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a commitment that, if something bad occurs, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If your real estate burns down, for instance, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is sometimes a confusing affair – and delay sometimes compounds the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a way to regain the costs if, when all is said and done, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a car 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 and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame 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 process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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 a start, 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 lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its costs by raising your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 accountable), you'll typically get half your deductible back, depending on the laws in your state.
In addition, 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 personal injury legal assistance Tacoma WA, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the records of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.