What You Need to Know About Subrogation
Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured while working, for example, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and figure out the blame later. They then need a way to recoup the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a vehicle accident. Another car ran 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 police tell the insurance companies that the other driver was entirely at fault and his insurance policy should have paid for the repair of your auto. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies 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 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 the Insured?
For starters, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by raising your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is acting both in its own interests and in yours. 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 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss 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 criminal defense attorney Pleasant Grove UT, pursue subrogation and wins, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth weighing the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.