Subrogation and How It Affects Your Insurance Policy
Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the people who employ them. Rather than leave it to the professionals, it would be in your benefit to know the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
An insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, when all the facts are laid out, they weren't responsible for the expense.
For Example
You are in an auto accident. Another car crashed into yours. The police show up to assess the situation, 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 at fault and her insurance policy 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 method 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. Under ordinary circumstances, only you can sue for damages to your person 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 that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by boosting your premiums. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full 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.
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 personal injury lawyer Lithia Springs, GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth weighing the records of competing firms to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money 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, you should keep looking.
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