Subrogation is a term that's well-known among insurance and legal companies but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more knowledgeable you are, the better decisions you can make about your insurance company.
Any insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your home is burglarized, for example, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a mechanism to regain the costs if, ultimately, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a highway accident. Another car collided with yours. The police show up to assess the situation, 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 entirely to blame and her 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 way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if you have a deductible, your insurer 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 be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all 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 $500 back, based on the laws in most states.
Furthermore, 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 attorney Norcross GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the records of competing agencies to determine whether they pursue valid subrogation claims; if they do so fast; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.