Subrogation is a concept that's understood in insurance and legal circles but often not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know an overview of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you own is an assurance that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If you get an injury while you're on the clock, your employer's workers compensation picks up the tab 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 sometimes a tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance firms often decide to pay up front and assign blame after the fact. They then need a mechanism to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Can You Give an Example?
Your stove catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages to your self 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 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 who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by raising your premiums. On the other hand, if it has a capable legal team and goes after those cases aggressively, 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 accountable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident attorney Lithia springs GA, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue winnable subrogation claims; if they do so without delay; if they keep their customers informed as the case continues; 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, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.