Subrogation and How It Affects Your Insurance Policy
Subrogation is a term that's well-known in legal and insurance circles but often not by the customers they represent. Even if you've never heard the word before, it is to your advantage to understand an overview of the process. The more information you have, the better decisions you can make about your insurance policy.
Any insurance policy you have is a commitment 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 courts, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and delay sometimes increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a mechanism to recover the costs if, when all is said and done, they weren't responsible for the expense.
For Example
You are in a highway accident. Another car collided with yours. Police are called, 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 auto. How does your insurance company get its money 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. Usually, 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 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by ballooning your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them aggressively, it is doing you a favor as well as itself. 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, depending on your state laws.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal defense lawyer american fork ut, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth researching the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims without delay; 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 deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.