Subrogation is a term that's well-known among insurance and legal firms but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to know an overview of how it works. The more information you have, the better decisions you can make about your insurance company.
Any insurance policy you own is a promise that, if something bad happens to you, the firm that insures the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy 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 path to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Can You Give an Example?
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your auto. How does your insurance 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 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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 Individuals?
For a start, if your insurance policy stipulated 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 the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by ballooning your premiums. On the other hand, if it has a competent legal team and pursues them aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 workers compensation Milton, ga, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking up the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders informed as the case goes on; 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, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.