Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the steps of how it works. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you own is an assurance that, if something bad happens to you, the business that covers the policy will make good in one way or another in a timely fashion. If a blizzard damages your house, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and delay sometimes increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a means to recoup the costs if, in the end, they weren't responsible for the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the loss. You already have your money, 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended 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 Individuals?
For a start, 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 lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Auto accident lawyer Norcross GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing companies to determine whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders posted as the case proceeds; 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 insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.