Subrogation is an idea that's well-known among legal and insurance professionals but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to know the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Any insurance policy you own is a promise that, if something bad occurs, the firm that insures the policy will make restitutions in a timely fashion. If you get injured at work, for example, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame afterward. They then need a way to get back the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all 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 at fault), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as workers compensation Milton, ga, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing firms to evaluate if they pursue winnable subrogation claims; if they do so fast; if they keep their clients informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record 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.