Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it would be in your benefit to comprehend the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a method to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
Can You Give an Example?
Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. 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. You already have your money, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Usually, 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 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 one thing, 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 lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by raising your premiums. On the other hand, if it has a proficient legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total loss 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 attorney Canton, ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders updated as the case proceeds; 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 insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.