Subrogation is a term that's well-known among legal and insurance firms but often not by the people who hire them. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of the process. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is an assurance that, if something bad happens to you, the business that insures the policy will make restitutions in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a path to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Can You Give an Example?
Your stove catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him accountable 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 payment after it has paid for something that should have been paid by some other entity. 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. Ordinarily, only you can sue for damages done 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 originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. 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 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss 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 auto accident lawyer Austell GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the records of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.