Subrogation is a concept that's well-known among insurance and legal companies but rarely by the people who hire them. Even if it sounds complicated, it is to your advantage to know the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is typically a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a way to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
For Example
You are in a highway accident. Another car ran into yours. Police are called, 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 entirely at fault and her insurance should have paid for the repair of your car. How does your insurance company get its money 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self 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 Should I Care?
For a start, 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 insurance company is timid on any subrogation case it might not win, it might choose to get back its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as trusts and estates law Racine WI, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking up the records of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.