Subrogation is an idea that's well-known among legal and insurance professionals but rarely by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to know an overview of the process. The more you know about it, the more likely relevant proceedings will work out favorably.
Any insurance policy you own is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If your house is robbed, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a way to get back the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Let's Look at an Example
You are in an auto 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 entirely to blame and her insurance should have paid for the repair of your car. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if your insurance policy stipulated 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, depending on your state laws.
Additionally, 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 auto accident lawyer Norcross, Ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth researching the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.