Subrogation is a term that's well-known among legal and insurance professionals but rarely by the policyholders who employ them. Even if you've never heard the word before, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are, the more likely 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 good without unreasonable delay. If your house suffers fire damage, for instance, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance companies often opt to pay up front and assign blame after the fact. They then need a way to regain the costs if, ultimately, they weren't in charge of the payout.
For Example
You are in a car accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your car. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer 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 starters, if you have a deductible, your insurer wasn't the only one that 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 insurer is timid on any subrogation case it might not win, it might choose to recover its losses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), 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. If your insurance company or its property damage lawyers, such as car accident attorney austell ga, pursue subrogation and wins, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the records of competing agencies to determine if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out 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.