Subrogation is a term that's understood among insurance and legal companies but often not by the customers who hire them. Rather than leave it to the professionals, it would be in your self-interest to know the steps of how it works. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a mechanism to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
You are in a car accident. Another car ran into yours. The police show up to assess the situation, 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 car. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Policyholders?
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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by raising your premiums. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, 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 responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 serious injury attorney pasadena md, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing firms to determine if they pursue valid subrogation claims; if they do so fast; if they keep their clients informed as the case proceeds; 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 income by raising your premiums, you should keep looking.