Subrogation is an idea that's well-known in legal and insurance circles but rarely by the people they represent. Even if you've never heard the word before, it is in your benefit to understand the steps of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If a blizzard damages your property, for instance, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay sometimes adds to the damage to the victim – insurance firms usually decide to pay up front and figure out the blame later. They then need a path to recover the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at 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 that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and his 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 after it has paid for something that should have been paid by some other entity. 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. Ordinarily, only you can sue for damages done to your person 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 Me?
For starters, 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 – 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 losses by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them 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 one-half culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss 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 child custody lawyers near me Las Vegas NV, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.