What You Need to Know About Subrogation
Subrogation is a term that's understood among insurance and legal professionals but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to understand the steps of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you hold is a commitment that, if something bad occurs, the company that insures the policy will make good without unreasonable delay. If a windstorm damages your home, for example, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting in some cases increases the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a path to get back the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and her insurance should have paid for the repair of your car. How does your insurance company get its funds back?
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 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 person or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect the Insured?
For a start, if your insurance policy stipulated 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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Auto accident attorney Norcross, Ga, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth looking at the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so without delay; if they keep their policyholders informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 safeguarding its bottom line by raising your premiums, you'll feel the sting later.