Subrogation is a term that's understood among legal and insurance professionals but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to know the steps of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance companies often decide to pay up front and assign blame later. They then need a method to regain the costs if, in the end, they weren't responsible for the payout.
Can You Give an Example?
You are in a car 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 it's determined that the other driver was at fault and his insurance policy should have paid for the repair of your car. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Ordinarily, 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 in exchange 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 one thing, 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is doing you a favor as well as itself. 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 accountable), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total cost 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 workers comp attorney Reisterstown MD, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth weighing the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.