Subrogation is an idea that's well-known among insurance and legal firms but rarely by the customers who employ them. Rather than leave it to the professionals, it is to your advantage to understand an overview of how it works. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you own is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and delay often compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
You go to the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and he takes down your coverage information. You get stitches and your insurance company is billed for the tab. But the next day, when you clock in at work – where the injury occurred – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance. The latter has an interest in recovering its costs in some way.
How Does Subrogation Work?
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 insurance firms 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 given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them efficiently, it is doing you a favor as well as itself. If all ten grand 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 accountable), you'll typically get $500 back, based on the laws in most states.
Additionally, 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 insurance claim lawyers Tacoma, WA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth examining the reputations of competing firms to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their customers posted as the case proceeds; 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 record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.