Subrogation is a concept that's well-known in insurance and legal circles but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the nuances of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a car accident. Another car crashed 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 policy 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 method 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. Usually, only you can sue for damages done to your person 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 originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if you have a deductible, your insurer wasn't the only one who 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 insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is doing you a favor as well as itself. 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 50 percent to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total loss of an accident is more than 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 wrongful death lawyer Frederick MD, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth measuring the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers informed 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 record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.