- 1 24, 2018
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Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to comprehend the steps of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If you get injured while working, for example, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and delay in some cases adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a method to regain the costs if, ultimately, they weren't actually in charge of the payout.
Let's Look at an Example
Your stove catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. The home has already been fixed up in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 person or property. But under subrogation law, your insurer is considered to have 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.
Why Do I Need to Know This?
For a start, 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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover 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 them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as workmans comp Dunwoody, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth researching the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.