Subrogation is a term that's well-known among insurance and legal companies but often not by the customers who employ them. Rather than leave it to the professionals, it would be in your self-interest to comprehend the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your house is broken into, for example, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a way to get back the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
Let's Look at an Example
You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 to your self or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect Individuals?
For starters, 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law morgan hill ca, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth examining the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised as the case goes on; 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 insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.