Subrogation is a concept that's understood in legal and insurance circles but rarely by the people who employ them. Even if you've never heard the word before, it would be in your self-interest to know the steps of how it works. The more information you have, the more likely relevant proceedings will work out favorably.
An insurance policy you hold is a promise that, if something bad occurs, the business that insures 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 instance, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame afterward. They then need a means to get back the costs if, ultimately, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a highway accident. Another car collided with yours. The police show up to assess the situation, 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 entirely to blame and his insurance 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 process 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company 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 Individuals?
For starters, if you have a deductible, it wasn't just your insurance company that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost 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 personal injury law firm Tacoma WA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth scrutinizing the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients apprised 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, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.