Subrogation is an idea that's well-known among insurance and legal companies but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend an overview of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you hold is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while working, for example, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is regularly a confusing affair a€" and delay in some cases adds to the damage to the policyholder a€" insurance companies usually decide to pay up front and figure out the blame later. They then need a method to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You are in an auto accident. Another car ran 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 her insurance should have paid for the repair of your auto. How does your 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 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 done to your person or property. But under subrogation law, your insurance company 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 Me?
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 a€" namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price 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 worker compensation terms Canton GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth scrutinizing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders informed as the case continues; 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 insurance agency has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.