Subrogation is a term that's well-known among insurance and legal professionals but sometimes not by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
Every insurance policy you own is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes compounds the damage to the victim – insurance firms often opt to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when all is said and done, they weren't responsible for the expense.
Let's Look at an Example
You are in a highway 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 police tell the insurance companies that the other driver was to blame and her insurance 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 after it has paid for something that should have been paid by some other entity. 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated 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 recover its losses by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as child custody law firm boulder city Nv, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth researching the records of competing agencies to find out if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised 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, on the other hand, an insurer has a reputation 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.