Subrogation is a term that's well-known in insurance and legal circles but often not by the policyholders who employ them. Even if it sounds complicated, it is in your benefit to understand the nuances of how it works. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you have is a promise that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance companies usually decide to pay up front and figure out the blame later. They then need a path to recover the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You are in an auto accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method 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 person or property. But under subrogation law, your insurance company 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.
Why Do I Need to Know This?
For a start, if you have a deductible, your insurance company wasn't the only one who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
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 auto accident cumming ga, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders apprised as the case goes on; 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, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.