Subrogation is a term that's understood in insurance and legal circles but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to know the steps of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and delay often adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.
Can You Give an Example?
You are in a highway accident. Another car collided with 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 police tell the insurance companies that the other driver was at fault and his 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 process that an insurance company uses to claim reimbursement 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 done to your person or property. But under subrogation law, your insurer is given 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 Does This Matter to Me?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is doing you a favor as well as itself. 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 accountable), you'll typically get $500 back, depending on your state laws.
Additionally, if the total expense 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 child custody attorney Lindon ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth researching the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their account holders updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.