Subrogation is an idea that's well-known among insurance and legal firms but sometimes not by the people who hire them. Even if it sounds complicated, it would be in your benefit to know the steps 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 insurer of the policy will make restitutions in a timely fashion. If your real estate suffers fire damage, for instance, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance details, 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 auto. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 insurer is extended 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 one thing, if you have a deductible, it wasn't just your insurer 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 insurer is timid on any subrogation case it might not win, it might opt to recover its losses by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all $10,000 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 at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers compensation Milton, ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth measuring the records of competing firms to determine if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.