Subrogation is a concept that's well-known in legal and insurance circles but often not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know the nuances of how it works. The more information you have about it, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't 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 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 at fault and his insurance policy should have paid for the repair of your car. How does your company get its money back?
How Subrogation Works
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 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 that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For starters, if you have 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 insurance company is timid on any subrogation case it might not win, it might opt to get back 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 acting both in its own interests and in yours. If all of the money 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 culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total expense 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 social security disability 53147, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth contrasting the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible 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 safeguarding its income by raising your premiums, you should keep looking.