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 is in your benefit to comprehend an overview of how it works. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury at work, for instance, your employer's workers compensation agrees to pay 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 often a confusing affair – and delay sometimes increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame later. They then need a mechanism to recover the costs if, when all is said and done, they weren't in charge of the payout.
Can You Give an Example?
You are in a traffic-light 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 it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your insurance 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 payment 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of 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 a start, 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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all ten grand 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as attorney office Puyallup , WA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth scrutinizing the reputations of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements immediately 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 bottom line by raising your premiums, you'll feel the sting later.
attorney office Puyallup , WA