Subrogation is a concept that's well-known among insurance and legal professionals but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to understand the steps of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you have is a promise that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.
But since determining who is financially accountable 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 decide to pay up front and figure out the blame afterward. They then need a path to recover the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You are in a highway accident. Another car ran into 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 it's determined that the other driver was at fault and his insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 insurance company is extended 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.
How Does This Affect Individuals?
For starters, 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 lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by ballooning your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is doing you a favor as well as itself. If all $10,000 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 culpable), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total price 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 court Henderson Nv, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth comparing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.