The Things Every Policy holder Ought to Know About Subrogation
Subrogation is a term that's understood in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it would be in your self-interest to understand the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame later. They then need a means to recoup the costs if, when all is said and done, they weren't in charge of the expense.
Let's Look at an Example
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance details, 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 at fault and his insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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 one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by boosting your premiums and call it a day. 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 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 to blame), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost 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 Henderson Nv, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth contrasting the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses 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 protecting its bottom line by raising your premiums, you should keep looking.