Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to know an overview of the process. The more you know, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you have is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your property suffers fire damage, for example, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies usually decide to pay up front and assign blame afterward. They then need a means to regain the costs if, ultimately, they weren't actually responsible for the expense.
For Example
You are in a highway accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. 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 for making good on 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 Individuals?
For a start, if you have 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 lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a capable legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense 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 insurance claims disputes Tacoma, WA, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth measuring the reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.