Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the people they represent. Even if you've never heard the word before, it is to your advantage to comprehend the nuances of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you own is a promise that, if something bad happens to you, the business that covers the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that party'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 compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, when all is said and done, they weren't in charge of the payout.
You are in a vehicle accident. Another car ran 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 at fault and her insurance policy should have paid for the repair of your vehicle. 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. 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 for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 lax about bringing subrogation cases to court, it might opt to get back its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, 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 local criminal defense attorney Spanish Fork UT, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.