Subrogation is an idea that's well-known among legal and insurance firms but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Any 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 without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a mechanism to get back the costs if, in the end, they weren't actually responsible for the expense.
For Example
You are in a vehicle accident. Another car crashed into 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 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 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 self or property. But under subrogation law, your insurance company 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 Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense 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 marietta personal injury lawyer, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth comparing the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so fast; if they keep their clients informed 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, instead, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.