Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the people they represent. Even if it sounds complicated, it is in your benefit to know the steps of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If a blizzard damages your home, for instance, your property insurance agrees to repay 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 time-consuming affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a mechanism to regain the costs if, once the situation is fully assessed, they weren't in charge of the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. The home has already been fixed up in the name of expediency, but your insurance agency is out ten grand. What does the agency 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. Under ordinary circumstances, only you can sue for damages done to your self 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 Me?
For one thing, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. 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 50 percent to blame), you'll typically get $500 back, depending on your state laws.
In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as lawyers for car accidents Smyrna GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money 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 protecting its profit margin by raising your premiums, you'll feel the sting later.