Subrogation is a concept that's well-known among legal and insurance firms but often not by the people who employ them. Rather than leave it to the professionals, it is to your advantage to understand the steps of the process. The more information you have, the better decisions you can make about your insurance policy.
An insurance policy you own is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions in a timely manner. If you get injured at work, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a way to regain the costs if, when all the facts are laid out, they weren't in charge of the expense.
Can You Give an Example?
You are in a vehicle 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 that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and his insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the way 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 to your self 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 that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by ballooning your premiums. On the other hand, if it has a proficient legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all of the money 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, based on the laws in most states.
Furthermore, 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 auto accident injury lawyer Middle River MD, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth weighing the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so fast; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.