Subrogation is an idea that's understood among legal and insurance professionals but often not by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to understand the nuances of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you hold is an assurance that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is regularly a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, 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 entirely to blame and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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.
How Does This Affect the Insured?
For starters, if you have a deductible, your insurance company 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 opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as foreclosure lawyers Batesville AR, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they do so fast; if they keep their customers updated 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 paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.