Subrogation is a term that's well-known in legal and insurance circles but often not by the policyholders who employ them. Rather than leave it to the professionals, it would be in your self-interest to know the steps of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your property suffers fire damage, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a means to regain the costs if, when all is said and done, they weren't actually in charge of the expense.
Can You Give an Example?
You are in an auto 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 police tell the insurance companies that the other driver was entirely at fault and her insurance should have paid for the repair of your auto. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Normally, only you can sue for damages done 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 Should I Care?
For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 timid on any subrogation case it might not win, it might choose to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, 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 Criminal defense cottonwood heights ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing companies to find out whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.