Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the people who employ them. Rather than leave it to the professionals, it is in your self-interest to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Any insurance policy you have is an assurance that, if something bad occurs, the business that insures the policy will make good in one way or another in a timely fashion. If your home is broken into, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and delay sometimes compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Can You Give an Example?
You are in a highway 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 that pays for the repairs right away. Later police tell the insurance companies that the other driver was at fault and her insurance policy should have paid for the repair of your car. 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 when it pays out a claim that turned out not to be its responsibility. 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, 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 $500 back, depending on your state laws.
Additionally, if the total price 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 bankruptcy lawyer kemmerer wy, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing companies to determine if they pursue valid subrogation claims; if they do so fast; 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 funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.