Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to understand the steps of the process. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you have is a promise that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If your home burns down, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
You are in a car accident. Another car ran 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 it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 to your self or property. But under subrogation law, your insurer is considered to have 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 Does This Matter to Me?
For starters, 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 lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price 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 attorney at law olympia wa, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders posted as the case proceeds; 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 insurer has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.