Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a way to get back the costs if, in the end, they weren't in charge of the payout.
Can You Give an Example?
You are in a vehicle accident. Another car collided with 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 it's determined 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 money back?
How Does Subrogation Work?
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 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 self or property. But under subrogation law, your insurer is given 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.
How Does This Affect Policyholders?
For a start, if you have a deductible, it wasn't just your insurer 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 lax about bringing subrogation cases to court, it might choose to get back 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 those cases aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full 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, depending on the laws in your state.
Additionally, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as real estate attorney paddock lake wi, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.real estate attorney paddock lake wi