Subrogation is a term that's well-known among legal and insurance professionals but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the steps of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in a timely manner. If you get an injury while you're on the clock, for instance, your employer's workers compensation 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 heavily involved affair – and delay in some cases increases the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a path to regain the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a vehicle 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 and file a repair claim. Later it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your company get its funds 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 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 to your person or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who 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 lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as employment lawyer 98466, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth weighing the reputations of competing agencies to determine whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their policyholders advised as the case goes on; 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, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.