Subrogation is a term that's understood in legal and insurance circles but rarely by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the nuances of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
Every insurance policy you have is an assurance that, if something bad occurs, the company that insures the policy will make good in one way or another without unreasonable delay. If your property is broken into, for example, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a way to get back the costs if, in the end, they weren't actually in charge of the expense.
You are in a vehicle accident. Another car collided with 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 police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange 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.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 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.
Furthermore, if the total loss 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 family law lawyers near me Salt Lake City UT, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth examining the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.