Subrogation is a concept that's understood in insurance and legal circles but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand an overview of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
An insurance policy you have is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If your house burns down, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame later. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
You are in a traffic-light accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was at fault and her insurance should have paid for the repair of your auto. How does your company get its funds back?
How Subrogation Works
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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer 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.
Why Should I Care?
For a start, if you have 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmen's compensation Alpharetta, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money 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 safeguarding its profit margin by raising your premiums, you should keep looking.