Subrogation is a term that's well-known among legal and insurance professionals but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your benefit to understand the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your real estate burns down, for instance, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, in the end, they weren't in charge of the expense.
Can You Give an Example?
You are in a traffic-light accident. Another car ran into 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 police tell the insurance companies that the other driver was at fault and his insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?
How Subrogation Works
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 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 self 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 originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if your insurance policy stipulated 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 – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car accident attorney Canton, ga, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth measuring the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers informed as the case proceeds; 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, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.