Subrogation is an idea that's understood in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Every insurance policy you own is an assurance that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another in a timely manner. If your house is broken into, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a means to regain the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance details, 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 at fault and her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?
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 companies 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 extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, 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 opt to recover its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmans comp lawyer Lithia Springs GA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding 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 bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.