Subrogation is a concept that's understood in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it is in your benefit to understand the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is often a confusing affair – and delay often increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You are in an auto accident. Another car collided with yours. Police are called, 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 to blame and her insurance should have paid for the repair of your vehicle. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights 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 Policyholders?
For one thing, if your insurance policy stipulated a deductible, your insurer 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 the tune of $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 and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 responsible), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as lawsuit attorney springville ut, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth measuring the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.