Subrogation is a term that's understood among legal and insurance professionals but rarely by the people they represent. Rather than leave it to the professionals, it is to your advantage to comprehend an overview of the process. The more information you have about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you hold is a commitment that, if something bad happens to you, the business that insures the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay often adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. The house has already been repaired in the name of expediency, but your insurance firm is out ten grand. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 to your self or property. But under subrogation law, your insurer is considered to have some of your rights 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 Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss 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 workers comp attorney Canton, ga, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth scrutinizing the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.