Subrogation is a term that's well-known among insurance and legal companies but often not by the policyholders who employ them. Even if it sounds complicated, it is in your self-interest to understand an overview of the process. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you hold is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another in a timely fashion. If a storm damages your property, for example, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.
Can You Give an Example?
You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, 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 entirely to blame and her insurance policy 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 method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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.
How Does This Affect the Insured?
For starters, 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 lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar 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.
Moreover, if the total price 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 catastrophic personal injury lawyer Severna Park MD, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth researching the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.catastrophic personal injury lawyer Severna Park MD