Subrogation is an idea that's understood among legal and insurance firms but sometimes not by the people they represent. Even if you've never heard the word before, it is to your advantage to understand the nuances of how it works. The more you know about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If your house is broken into, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes adds to the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Let's Look at an Example
You are in a car accident. Another car crashed into 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 to blame and her insurance should have paid for the repair of your car. How does your insurance company get its money 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of 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 starters, if you have a deductible, it wasn't just your insurer 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 opt to recover its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on your state laws.
Furthermore, 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 Lawyers serving Sumner wa, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth measuring the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.