Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the people who employ them. Even if you've never heard the word before, it would be to your advantage to understand the steps of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you have is an assurance that, if something bad occurs, the firm on the other end of the policy will make good in a timely manner. If your house burns down, for instance, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a confusing affair – and delay in some cases compounds the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, 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 her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money 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 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 in exchange 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 Do I Need to Know This?
For one thing, 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 the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full 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, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as wage garnishment jonesboro ar, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing companies to find out whether they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders advised as the case continues; 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, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.