Subrogation is an idea that's well-known among insurance and legal firms but often not by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to understand the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
Any insurance policy you have is a promise that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while working, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame later. They then need a method to get back the costs if, in the end, they weren't responsible for the expense.
You are in an auto 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 that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your car. How does your 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 reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies 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 self or property. But under subrogation law, your insurer is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if you have 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 – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, 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 one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as work injury Duluth, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing companies to determine whether they pursue valid subrogation claims; if they do so quickly; if they keep their customers informed as the case proceeds; 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, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.