What Every Insurance Policy holder Ought to Know About Subrogation
Subrogation is a concept that's understood among legal and insurance companies but often not by the customers who employ them. Rather than leave it to the professionals, it is in your benefit to know an overview 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 own is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame later. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Can You Give an Example?
You are in an auto accident. Another car crashed into 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 his insurance should have paid for the repair of your vehicle. 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 reimbursement 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 insurer is given some of your rights in exchange 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 Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its losses by ballooning your premiums. On the other hand, if it has a proficient legal team and pursues them efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as personal injury attorney near me Sumner WA, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth weighing the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers informed as the case proceeds; 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, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.