Subrogation is a term that's well-known among insurance and legal companies but often not by the customers who hire them. Even if it sounds complicated, it is to your advantage to understand the steps of the process. The more information you have, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If your property is broken into, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is often a time-consuming affair – and delay often compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a way to regain the costs if, ultimately, they weren't responsible for the payout.
Let's Look at an Example
You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your insurance 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 reimbursement 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. 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 that was originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 to blame), you'll typically get $500 back, based on the laws in most states.
Additionally, 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 Personal injury attorney near me Sumner WA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth looking at the records of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.