Subrogation is a term that's understood among legal and insurance firms but rarely by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand the nuances of how it works. The more information you have, the more likely relevant proceedings will work out in your favor.
Every insurance policy you hold is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in a timely fashion. If you get an injury at work, for instance, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
For Example
You are in an auto accident. Another car collided with yours. Police are called, 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 to blame and his insurance should have paid for the repair of your auto. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 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 half your deductible back, based on the laws in most states.
Moreover, if the total price 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 lawyer Mableton GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth examining the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders updated as the case goes on; 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 agency has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.