Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the policyholders who employ them. Even if it sounds complicated, it would be in your self-interest to comprehend the steps of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad occurs, the business on the other end of the policy will make good in one way or another in a timely manner. If your house suffers fire damage, for instance, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame later. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a car accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and his insurance should have paid for the repair of your auto. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 done to your self or property. But under subrogation law, your insurer 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.
Why Should I Care?
For one thing, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total cost 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 accidentes de autos Marietta GA, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth looking up the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money 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 protecting its profit margin by raising your premiums, you'll feel the sting later.