Subrogation is an idea that's well-known among insurance and legal firms but rarely by the policyholders who employ them. Even if you've never heard the word before, it would be to your advantage to understand an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury at work, for instance, your company'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 accountable for services or repairs is regularly a heavily involved affair a€" and time spent waiting sometimes adds to the damage to the policyholder a€" insurance firms often decide to pay up front and assign blame after the fact. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, your insurance company 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 a€" to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost 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 Divorce attorney american fork UT, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses 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 covering its income by raising your premiums, you'll feel the sting later.