Subrogation is a concept that's well-known among legal and insurance companies but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know an overview of how it works. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you own is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a path to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
You are in a vehicle accident. Another car collided with 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 at fault and his insurance policy should have paid for the repair of your vehicle. 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 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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.
Why Do I Need to Know This?
For a start, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by raising your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all ten grand 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car injury lawyer Alpharetta ga, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking up the records of competing firms to find out if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.