Subrogation is a term that's understood in insurance and legal circles but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be in your self-interest to understand the steps of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you own is an assurance that, if something bad occurs, the company that covers the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and delay often adds to the damage to the victim – insurance firms usually decide to pay up front and figure out the blame later. They then need a method to recover the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
Can You Give an Example?
You are in an auto 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 police tell the insurance companies that the other driver was entirely to blame and his insurance policy should have paid for the repair of your car. How does your insurance company get its funds 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 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 done to your person or property. But under subrogation law, your insurer is given some of your rights 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.
How Does This Affect Policyholders?
For a start, if you have a deductible, it wasn't just your insurer 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 recover its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, depending on your state laws.
Moreover, if the total cost 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 insurance claims disputes Tacoma, WA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.