Subrogation and How It Affects Your Insurance
Subrogation is a concept that's understood among legal and insurance firms but often 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 to your advantage to comprehend an overview of the process. The more you know about it, the better decisions you can make about your insurance company.
Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If you get an injury while working, for instance, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
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 police tell the insurance companies that the other driver was entirely at fault and his insurance policy should have paid for the repair of your auto. 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 reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 insurance company 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 Individuals?
For a start, if you have 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as Lawyers serving Tacoma wa, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.