Subrogation is an idea that's well-known in legal and insurance circles but often not by the people they represent. Rather than leave it to the professionals, it would be to your advantage to know an overview of how it works. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
You are in a car accident. Another car crashed into 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 entirely to blame and her insurance policy should have paid for the repair of your car. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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.
How Does This Affect the Insured?
For starters, 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back 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 enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as attorneys that specialize in auto accidents Austell GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth weighing the reputations of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients advised as the case proceeds; 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 reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.