Subrogation is an idea that's well-known among legal and insurance companies but sometimes not by the customers they represent. Even if it sounds complicated, it would be to your advantage to understand the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make good in one way or another in a timely manner. If you get hurt while working, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, when all is said and done, they weren't actually responsible for the payout.
For Example
Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the damages. The home has already been fixed up in the name of expediency, but your insurance firm is out all that money. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 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 originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if you have 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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
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 workers comp attorney Dunwoody, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing companies to determine if they pursue legitimate subrogation claims; if they do so fast; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.