Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the nuances of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in a timely fashion. 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 ascertaining who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting often adds to the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a method to recover the costs if, in the end, they weren't actually responsible for the expense.
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 information, 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 entirely to blame and his insurance policy should have paid for the repair of your car. How does your company get its funds 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurer is timid on any subrogation case it might not win, it might opt to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost 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 decatur ga, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance companies are not the same. When comparing, it's worth comparing the reputations of competing firms to determine if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers posted 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.