Subrogation is a term that's understood among legal and insurance firms but often not by the people who hire them. Even if you've never heard the word before, it would be to your advantage to know the nuances of the process. The more you know, the more likely relevant proceedings will work out favorably.
Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If you get hurt while working, for example, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance companies often opt to pay up front and assign blame after the fact. They then need a path to recover the costs if, once the situation is fully assessed, they weren't responsible for the expense.
You are in a traffic-light 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 car. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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.
How Does This Affect Policyholders?
For starters, 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 lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its costs by raising your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, 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 one-half responsible), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Sumner WA attorneys, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth examining the records of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.