Subrogation is an idea that's understood in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it is to your advantage to know an overview of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your property suffers fire damage, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a way to regain the costs if, in the end, they weren't responsible for the payout.
Can You Give an Example?
You are in a car accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and his insurance policy should have paid for the repair of your auto. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. 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 one-half at fault), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price 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 employment attorney university place wa, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth scrutinizing the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders informed 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 safeguarding its profitability by raising your premiums, you'll feel the sting later.