Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to understand the nuances of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you own is an assurance that, if something bad occurs, the business that covers the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is usually a confusing affair aa‚¬" and delay sometimes adds to the damage to the policyholder aa‚¬" insurance firms usually decide to pay up front and assign blame afterward. They then need a way to regain the costs if, when all is said and done, they weren't in charge of the expense.
Let's Look at an Example
You are in a highway 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 and file a repair claim. Later it's determined that the other driver was entirely at fault and his insurance policy should have paid for the repair of your auto. 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 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on 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 Me?
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 aa‚¬" to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases 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 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as worker compensation terms Dunwoody GA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not created equal. When comparing, it's worth comparing the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers posted as the case continues; 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.