Subrogation is an idea that's understood among legal and insurance firms but rarely by the people they represent. Rather than leave it to the professionals, it is in your benefit to understand the steps of how it works. The more you know, the better decisions you can make about your insurance policy.
Every insurance policy you hold is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a way to recover the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You are in a car accident. Another car ran 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 it's determined that the other driver was entirely to blame and her 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 method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages 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 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 insurance company wasn't the only one that 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 recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, 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 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, 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 workmans comp Canton, ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth researching the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.