Subrogation is a term that's understood in insurance and legal circles but rarely by the people who employ them. Even if you've never heard the word before, it would be in your self-interest to know the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is typically a confusing affair – and delay often adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a way to recoup the costs if, in the end, they weren't actually responsible for the expense.
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 police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your auto. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Ordinarily, 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 originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by raising 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 of the money 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 to blame), you'll typically get half your deductible 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 costly. If your insurance company or its property damage lawyers, such as Family law Las Vegas NV, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth researching the records of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.