Subrogation is an idea that's well-known among insurance and legal firms but sometimes not by the people who employ them. Even if it sounds complicated, it is to your advantage to understand the steps of the process. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you hold is a commitment that, if something bad occurs, the firm that covers the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting often adds to the damage to the victim – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to get back the costs if, ultimately, they weren't actually responsible for the expense.
For Example
Your living room catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 insurance company is given some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
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 timid on any subrogation case it might not win, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. 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 one-half culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss 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 attorney Powder Springs, Ga, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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, you should keep looking.