Subrogation is a term 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 understand the steps of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If you get hurt at work, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting often increases the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a method to recover the costs if, in the end, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a car accident. Another car ran 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 police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your auto. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 self or property. But under subrogation law, your insurance company is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For one thing, if your insurance policy stipulated 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 be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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 $500 back, depending on the laws in your state.
Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as family law services Tumwater, WA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients advised as the case proceeds; 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 firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.