Subrogation is an idea that's understood in legal and insurance circles but rarely by the people who employ them. Even if you've never heard the word before, it is in your benefit to understand the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your home is broken into, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a way to regain the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a highway accident. Another car collided with 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 entirely to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange 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.
Why Do I Need to Know This?
For starters, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its expenses 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 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as auto accident injury lawyer pasadena, md, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth researching the records of competing companies to evaluate whether they pursue valid subrogation claims; if they do so quickly; if they keep their customers advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.