Subrogation is a term that's understood among insurance and legal firms but often not by the policyholders who employ them. Even if you've never heard the word before, it is in your benefit to comprehend the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is an assurance that, if something bad happens to you, the business that covers the policy will make restitutions in a timely fashion. If your house is robbed, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes compounds the damage to the policyholder – insurance companies often decide to pay up front and assign blame afterward. They then need a path to recover the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 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 has a knowledgeable legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 culpable), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as accident lawyer greater atlanta area, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not the same. When shopping around, it's worth researching the reputations of competing companies to find out if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.