Subrogation is a term that's understood in insurance and legal circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to understand an overview of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is a commitment that, if something bad occurs, the firm that insures the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is typically a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a method to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
You are in an auto accident. Another car ran into yours. Police are called, you exchange insurance information, 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 his insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Subrogation Works
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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For a start, 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 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 expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price 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 lawyer lithia springs ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth examining the records of competing firms to determine if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements right away 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.