What You Need to Know About Subrogation
Subrogation is a concept that's well-known among legal and insurance companies but sometimes not by the people they represent. Rather than leave it to the professionals, it would be to your advantage to understand the nuances of the process. The more you know about it, the more likely relevant proceedings will work out favorably.
An insurance policy you have is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely manner. If your house is robbed, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a path to regain the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You are in a traffic-light accident. Another car crashed into yours. Police are called, you exchange insurance details, 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 at fault and her insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given 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.
Why Does This Matter to Me?
For one thing, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by raising your premiums. On the other hand, if it has a competent legal team and goes after those cases aggressively, 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 one-half responsible), you'll typically get $500 back, depending on your state laws.
Additionally, 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 personal injury lawyer Powder Springs, GA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth looking at the records of competing agencies to determine whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their clients apprised as the case continues; 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 company has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.