Subrogation is an idea that's understood among legal and insurance firms but often not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you own is a promise that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, in the end, they weren't responsible for the expense.
You are in an auto accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your car. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them 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 one-half responsible), you'll typically get $500 back, depending on your state laws.
Moreover, 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 workers comp attorney Essex MD, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth contrasting the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case continues; 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 paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.