Subrogation is an idea that's well-known among insurance and legal firms but often not by the people who hire them. Even if it sounds complicated, it is in your benefit to comprehend an overview of the process. 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 happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes increases the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a highway accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, 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 policy should have paid for the repair of your auto. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights 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.
Why Do I Need to Know This?
For a start, if you have a deductible, your insurance company wasn't the only one who 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 choose to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total cost of an accident is more than 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 lawyer mableton, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they do so fast; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.