Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it would be in your benefit to understand the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you hold is a promise that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury while you're on the clock, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
You are in a car 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 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 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights 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 Policyholders?
For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury legal assistance Tacoma WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.