Subrogation is an idea that's well-known in insurance and legal circles but often not by the people they represent. Even if it sounds complicated, it is to your advantage to comprehend an overview of the process. The more you know, the better decisions you can make about your insurance policy.
Every insurance policy you own is a commitment 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 property is robbed, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the damages. You already have your money, 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 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended some of your rights 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 Should I Care?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by ballooning your premiums. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, 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 culpable), 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 auto accident lawyer Lithia springs GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not the same. When comparing, it's worth weighing the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.