Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders who employ them. Even if it sounds complicated, it would be in your self-interest to understand an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is an assurance that, if something bad occurs, the business that insures the policy will make good in one way or another in a timely manner. If your property is broken into, for instance, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, in the end, they weren't responsible for the payout.
You are in a highway accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, 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 at fault and her insurance should have paid for the repair of your car. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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 person or property. But under subrogation law, your insurance company is extended some of your rights 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 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Law office near bonney lake washington, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to find out if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.
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