Subrogation is a term that's well-known in insurance and legal circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to understand the steps of how it works. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you hold is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and delay in some cases adds to the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
For Example
Your bedroom 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 decent chance that a judge would find him to blame for the loss. The home has already been repaired in the name of expediency, but your insurance firm is out all that money. 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 insurance firms 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 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 starters, if your insurance policy stipulated 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 culpable), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price 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 Auto accident attorney Lithia Springs GA, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing firms to find out if they pursue valid subrogation claims; if they do so fast; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements quickly 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 profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.