Subrogation is a term that's understood in insurance and legal circles but rarely by the people who hire them. Rather than leave it to the professionals, it is to your advantage to understand the steps of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the firm that covers the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting often adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a method to regain the costs if, when all is said and done, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a vehicle accident. Another car ran into yours. Police are called, 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 to blame and her insurance should have paid for the repair of your auto. How does your 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs by ballooning your premiums. On the other hand, if it has a capable legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as employment lawyer payson ut, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing firms to determine if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.