What You Need to Know About Subrogation
Subrogation is a concept that's understood in legal and insurance circles but rarely by the policyholders who hire them. Even if you've never heard the word before, it is in your self-interest to know the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If you get hurt at work, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a mechanism to recover the costs if, ultimately, they weren't in charge of the payout.
Can You Give an Example?
You are in an auto accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your vehicle. How does your insurance 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 done to your self or property. But under subrogation law, your insurer is extended 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.
How Does This Affect Individuals?
For a start, if your insurance policy stipulated a deductible, your insurer 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 be precise, $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 knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all 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, based on the laws in most states.
Additionally, if the total expense 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 worker competition terms Austell GA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so fast; if they keep their clients updated as the case proceeds; 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 reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.