Subrogation is a concept that's well-known in legal and insurance circles but rarely by the policyholders who employ them. Even if it sounds complicated, it would be to your advantage to comprehend the steps of the process. The more information you have, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and delay often adds to the damage to the policyholder – insurance companies often decide to pay up front and assign blame after the fact. They then need a path to regain the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
For Example
You head to the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and he records your coverage details. You get stitches and your insurance company gets a bill for the tab. But on the following day, when you get to your place of employment – where the accident occurred – you are given workers compensation forms to file. Your company's workers comp policy is in fact responsible for the costs, not your medical insurance. The latter has an interest in recovering its money in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by boosting 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as discrimination lawyer university place wa, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When shopping around, it's worth researching the records of competing companies 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 proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.