Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers who hire them. Rather than leave it to the professionals, it is in your benefit to understand the nuances of how it works. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you hold is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If a blizzard damages your property, for instance, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is often a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your auto. 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 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases aggressively, 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 one-half accountable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as employment lawyer salem ut, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth measuring the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements immediately 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 paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.