Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand an overview of how it works. The more you know about it, the better decisions you can make with regard to your insurance company.
An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your real estate suffers fire damage, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and delay often increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a means to recoup the costs if, in the end, they weren't responsible for the payout.
Let's Look at an Example
Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. The house has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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 Does This Matter to Me?
For a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its losses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 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, depending on the laws in your state.
Moreover, 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 car injury lawyer Milton, ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth weighing the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their accountholders posted 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 firm has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.