What Every Insurance Policy holder Ought to Know About Subrogation
Subrogation is a term that's well-known among insurance and legal professionals but sometimes not by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions in a timely manner. If a windstorm damages your property, for instance, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is often a confusing affair – and time spent waiting sometimes increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a way to recover the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
Your garage catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him accountable for the damages. The home has already been repaired in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages 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.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by raising your premiums and call it a day. 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 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total expense 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 accident attorney Powder Springs GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth measuring the records of competing firms to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out 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.
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