Subrogation is a term that's well-known among insurance and legal firms but often not by the people they represent. Rather than leave it to the professionals, it would be in your self-interest to understand an overview of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the business that insures the policy will make good without unreasonable delay. If you get an injury while working, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes increases the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, in the end, 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 police tell the insurance companies that the other driver was entirely at fault and his insurance 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 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 companies 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 insurance company 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.
How Does This Affect the Insured?
For a start, 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 losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, 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 lawyer Spanish Fork UT, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth examining the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.