Subrogation is a term that's well-known in insurance and legal circles but rarely by the people they represent. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of the process. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you have is a promise that, if something bad happens to you, the business on the other end of the policy will make good in one way or another in a timely manner. If your house is burglarized, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a way to recover the costs if, in the end, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, 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 to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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 the Insured?
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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by raising your premiums. On the other hand, if it has a capable legal team and pursues them 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury law firm Marietta, GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth scrutinizing the records of competing agencies to determine whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.