Subrogation is a concept that's well-known among insurance and legal firms but sometimes not by the customers who employ them. Rather than leave it to the professionals, it would be in your benefit to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.
Every insurance policy you hold is a promise that, if something bad happens to you, the company that covers the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a path to get back the costs if, ultimately, they weren't actually in charge of the expense.
You are in a highway accident. Another car crashed into yours. Police are called, you exchange insurance information, 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 should have paid for the repair of your auto. How does your company get its money 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company 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 the Insured?
For starters, if you have a deductible, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after 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 at fault), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total loss 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 criminal defense attorney Spanish Fork UT, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth contrasting the reputations of competing companies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.