Subrogation is a term that's understood among legal and insurance companies but rarely by the people who employ them. Rather than leave it to the professionals, it is in your benefit to understand an overview of how it works. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If your property is broken into, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, in the end, they weren't in charge of the expense.
You are in an auto accident. Another car collided with 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 entirely to blame and his insurance should have paid for the repair of your car. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if your insurance policy stipulated 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 lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its expenses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as work injury Columbus, ga, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth researching the reputations of competing agencies to determine whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding 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'll feel the sting later.