Subrogation is a concept that's understood in legal and insurance circles but often not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
An insurance policy you have 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 real estate burns down, for example, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Can You Give an Example?
You are in an auto accident. Another car collided with yours. Police are called, you exchange insurance details, 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 at fault and his insurance should have paid for the repair of your vehicle. How does your company get its money 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer 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 Does This Matter to Me?
For starters, if you have a deductible, it wasn't just your insurer who 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by boosting your premiums. 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 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss 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 costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth scrutinizing the records of competing firms to determine if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.