Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders who hire them. Rather than leave it to the professionals, it is in your benefit to comprehend the steps of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.
Any insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is typically a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a car accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, 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 to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
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 companies 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 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.
Why Do I Need to Know This?
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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by raising your premiums. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 responsible), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total cost 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 workers compensation Austell GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing firms to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.