Subrogation is a term that's well-known in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it would be in your self-interest to know the nuances of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions without unreasonable delay. If your house is burglarized, your property insurance steps in to repay 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 tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a path to recover the costs if, when all is said and done, they weren't in charge of the payout.
You are in an auto 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 to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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 person or property. But under subrogation law, your insurer is considered to have 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 a start, if your insurance policy stipulated a deductible, your insurer 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. 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.
In addition, if the total expense 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 Criminal Defense Spanish Fork UT, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers apprised as the case goes on; 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 insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.