Subrogation is a concept that's understood in insurance and legal circles but often not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a promise that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another in a timely fashion. If a blizzard damages your real estate, for instance, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a car accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your auto. How does your insurance 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 after it has paid for something that should have been paid by some other entity. 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 self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, depending on your state laws.
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 criminal defense law firm Provo UT, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth measuring the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.