Subrogation is a term that's understood among insurance and legal professionals but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend the nuances of how it works. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your property is burglarized, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a means to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a traffic-light accident. Another car crashed into yours. The police show up to assess the situation, 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 at fault and his 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 way 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. 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 for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, 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 lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its losses by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.
Furthermore, 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 child custody attorney Springville ut, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.