Subrogation is an idea that's well-known among insurance and legal professionals but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to understand the steps of how it works. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If your house is broken into, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a time-consuming 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 afterward. They then need a way to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a car accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your vehicle. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended 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 starters, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar 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, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as truck accident lawyers Alpharetta ga, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth researching the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements right away 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.