Subrogation and How It Affects You
Subrogation is an idea that's understood among legal and insurance firms but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you hold is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good in a timely manner. If your property suffers fire damage, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms usually decide to pay up front and assign blame after the fact. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You are in an auto 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 it's determined that the other driver was entirely to blame and his insurance policy should have paid for the repair of your car. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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 Policyholders?
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 – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as lawyers in immigration Sandy Ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their account holders updated as the case proceeds; 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 reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.