Subrogation is an idea that's understood in insurance and legal circles but rarely by the policyholders who employ them. Rather than leave it to the professionals, it is to your advantage to comprehend the steps of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your property burns down, for example, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a mechanism to get back the costs if, when all is said and done, they weren't responsible for the payout.
You are in a highway 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 that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person 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 originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For one thing, if you have 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 insurer is timid on any subrogation case it might not win, it might opt to recoup its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all $10,000 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 responsible), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost 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 auto accident attorney Washington DC, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth contrasting the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders advised 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 firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.