Subrogation is a concept that's well-known among legal and insurance companies but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be in your benefit to comprehend an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in a timely manner. If a windstorm damages your real estate, for example, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and delay in some cases increases the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, when all is said and done, they weren't in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your 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 payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 insurer is extended 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 Policyholders?
For starters, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its expenses by ballooning your premiums. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 auto accident lithia springs ga, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth weighing the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so without delay; if they keep their policyholders updated 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 paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.