Subrogation is a term that's well-known among legal and insurance companies but often not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend an overview 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 hold is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in a timely manner. If you get injured at work, for instance, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't actually responsible for the payout.
For Example
You are in a vehicle 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 police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your car. How does your company get its money back?
How Subrogation Works
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 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 self or property. But under subrogation law, your insurer 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 Individuals?
For one thing, if you have a deductible, your insurer 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price 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 how do i find a real estate lawyer Williams Bay, WI, 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 evaluate if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.