Subrogation is an idea that's well-known in insurance and legal circles but rarely by the customers they represent. Even if you've never heard the word before, it is to your advantage to know an overview of how it works. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the business that covers the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
You are in an auto accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, 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 entirely to blame and his insurance should have paid for the repair of your car. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if you have a deductible, it wasn't just your insurer that 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 insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by ballooning your premiums. 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 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal defense attorney near me Spanish Fork UT, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their clients posted as the case continues; 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 record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.