Subrogation is a term that's understood in insurance and legal circles but rarely by the people they represent. Rather than leave it to the professionals, it is in your benefit to comprehend the steps of how it works. The more information you have, the better decisions you can make about your insurance policy.
Any insurance policy you own is a promise that, if something bad happens to you, the business that covers the policy will make restitutions without unreasonable delay. If a fire damages your home, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an Example
You are in a car accident. Another car collided with yours. Police are called, 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 at fault 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 method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights 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 one thing, 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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back 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 enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total price 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 auto accident attorney lithia springs ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.