Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to know the steps of the process. The more you know about it, the better decisions you can make about your insurance company.
Every insurance policy you own is a promise that, if something bad happens to you, the firm that insures the policy will make good in a timely fashion. If you get an injury on the job, for example, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a way to get back the costs if, in the end, they weren't actually responsible for 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 that pays for the repairs right away. Later it's determined that the other driver was to blame and her insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended 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.
Why Does This Matter to Me?
For starters, if you have a deductible, it wasn't just your insurer 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 insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all 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 responsible), you'll typically get $500 back, depending on your state laws.
Furthermore, 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 criminal defense attorney Spanish Fork UT, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth examining the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.