Subrogation is a term that's well-known in insurance and legal circles but often not by the people who employ them. Even if you've never heard the word before, it is in your benefit to understand the steps of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you hold is a commitment that, if something bad happens to you, the company that insures the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a method to recoup the costs if, in the end, they weren't in charge of the payout.
Can You Give an 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 and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your company get its funds back?
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 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 done to your person or property. But under subrogation law, your insurer 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 starters, if you have a deductible, your insurer 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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, based on the laws in most states.
Additionally, if the total price of an accident is over 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 child custody rights Henderson NV, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth comparing the reputations of competing firms to find out if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their clients 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 reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.