Subrogation is a concept that's understood in insurance and legal circles but rarely by the people they represent. Even if it sounds complicated, it would be in your benefit to comprehend an overview of the process. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you hold is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get injured at work, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and delay sometimes compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
For Example
You are in a highway accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, 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 entirely at fault and his insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
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 companies 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 person or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if you have a deductible, your insurance company wasn't the only one 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 insurance company is lax about bringing subrogation cases to court, it might choose to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, 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 one-half culpable), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total expense 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 lawyers for car accidents Smyrna GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.