Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders who employ them. Even if you've never heard the word before, it is in your benefit to comprehend an overview of the process. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you have is a promise that, if something bad happens to you, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your real estate suffers fire damage, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay often compounds the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a method to recoup the costs if, when all is said and done, they weren't in charge of the payout.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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.
How Does This Affect Me?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that 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 insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by raising your premiums. On the other hand, if it has a competent legal team and goes after them 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as bk personal 66061, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth examining the records of competing companies to determine if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.