Subrogation is an idea that's well-known in legal and insurance circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to understand an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If a fire damages your real estate, your property insurance steps in 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 regularly a confusing affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a path to recoup the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Let's Look at an Example
You are in a vehicle accident. Another car crashed into 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 auto. How does your insurance 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 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 given 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 Does This Matter to Me?
For starters, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total expense 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 attorneys that specialize in auto accidents Austell GA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth scrutinizing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.