Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the people they represent. Rather than leave it to the professionals, it is in your benefit to understand an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a path to recover the costs if, in the end, they weren't actually in charge of the payout.
You are in an auto accident. Another car crashed into yours. The police show up to assess the situation, 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 his insurance should have paid for the repair of your car. How does your company get its money 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 to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its expenses by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost 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 medical malpractice lawyer Washington DC, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth researching the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.