Subrogation is a concept that's understood in insurance and legal circles but often not by the people they represent. Even if it sounds complicated, it would be in your benefit to understand an overview of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a promise that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury while you're on the clock, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is typically a confusing affair – and delay in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
You are in a highway accident. Another car collided with yours. Police are called, 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 at fault and his insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 to your self or property. But under subrogation law, your insurer is considered to have 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.
Why Does This Matter to Me?
For a start, if you have 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 culpable), you'll typically get $500 back, depending on your state laws.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as family law firm Vancouver WA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth weighing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.