What Every Insurance Policy holder Ought to Know About Subrogation
Subrogation is a concept that's understood among insurance and legal companies but sometimes not by the customers who employ them. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of the process. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, when all is said and done, they weren't actually in charge of the expense.
For Example
Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance firm is out all that money. What does the firm do next?
How Subrogation Works
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 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 insurance company 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 Individuals?
For a start, if you have 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by ballooning your premiums and call it a day. 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 of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car accident attorney Norcross GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing companies to find out whether they pursue valid subrogation claims; if they do so without delay; 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 losses back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.