Subrogation is a term that's understood among legal and insurance professionals but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know the nuances of the process. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you have is an assurance that, if something bad happens to you, the company that covers the policy will make restitutions in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and delay in some cases compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to recoup the costs if, when all is said and done, they weren't actually responsible for the expense.
Let's Look at an Example
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance information, 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 to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?
How Subrogation Works
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 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 self or property. But under subrogation law, your insurance company is considered to have 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.
How Does This Affect Me?
For a start, 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by raising your premiums and call it a day. 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 ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as workmans comp attorney Milton, ga, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their accountholders posted 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 insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.