Subrogation is a term that's well-known in insurance and legal circles but often not by the customers who hire them. Rather than leave it to the professionals, it would be in your self-interest to understand an overview of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Any insurance policy you hold is a promise that, if something bad happens to you, the business that insures the policy will make good in one way or another without unreasonable delay. If your house is burglarized, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a means to recover the costs if, ultimately, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, 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 his insurance should have paid for the repair of your vehicle. 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 payment after it has paid for something that should have been paid by some other entity. 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 to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its losses by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. 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 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident attorney Austell GA, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth measuring the reputations of competing agencies to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders advised 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, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.