Subrogation is an idea that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it is in your self-interest to understand the nuances of the process. The more information you have, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a promise that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, your company's workers compensation insurance pays out 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 typically a time-consuming affair – and time spent waiting often compounds the damage to the victim – insurance firms usually decide to pay up front and figure out the blame later. They then need a means to regain the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a traffic-light 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 police tell the insurance companies that the other driver was entirely at fault and his 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 method 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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 one thing, if you have a deductible, it wasn't just your insurance company that 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 timid on any subrogation case it might not win, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, 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 one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as catastrophic injury law firm Severna Park MD, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.catastrophic injury law firm Severna Park MD