Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to comprehend an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is a commitment that, if something bad happens to you, the company that insures the policy will make good in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and delay often compounds the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
You are in an auto accident. Another car crashed 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 at fault and her 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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange 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.
How Does This Affect Individuals?
For starters, 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss 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 workers comp lawyer Milton, ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When shopping around, it's worth measuring the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.