Subrogation is a concept that's well-known among insurance and legal firms but rarely by the people who employ them. Rather than leave it to the professionals, it is in your self-interest to know the steps of the process. The more information you have, 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 company that insures the policy will make restitutions in one way or another in a timely manner. If your home is broken into, for instance, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is often a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Let's Look at an Example
Your bedroom catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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 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.
Why Does This Matter to Me?
For starters, if your insurance policy stipulated 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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is acting both in its own interests and in yours. If all of the money 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 to blame), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total cost 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 Duluth ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking up the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.