Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the customers they represent. Even if you've never heard the word before, it is in your self-interest to understand the steps of the process. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions without unreasonable delay. If a hailstorm damages your real estate, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Can You Give an Example?
You are in a vehicle 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 to blame and his insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurer is given some of your rights in exchange 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 Me?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all of the money 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 $500 back, based on the laws in most states.
Additionally, if the total expense 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 workers compensation Columbus, ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders informed as the case proceeds; 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 insurance agency has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.