Subrogation is an idea that's well-known among legal and insurance firms but sometimes not by the people who hire them. Even if you've never heard the word before, it is in your benefit to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Every insurance policy you have is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good without unreasonable delay. If a blizzard damages your property, for example, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often compounds the damage to the victim – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Your kitchen catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if you have a deductible, your insurance company wasn't the only one 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all of the money 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers comp lawyer Mableton GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking up the records of competing companies to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.