Subrogation is a term that's understood in insurance and legal circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of the process. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If a blizzard damages your house, for example, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a path to recover the costs if, once the situation is fully assessed, they weren't in charge of the expense.
For Example
Your garage catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the loss. The home has already been fixed up in the name of expediency, but your insurance company is out $10,000. What does the company do next?
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. Ordinarily, only you can sue for damages done to your self 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 originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated 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 lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by upping your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is over 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 auto accident decatur ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth measuring the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.