Subrogation is a term that's understood in legal and insurance circles but often not by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If you get hurt at work, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay often compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a means to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
Let's Look at an Example
You are in an auto accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?
How Does Subrogation Work?
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. Normally, 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 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 one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. 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 one-half responsible), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as injury lawyers Smyrna GA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth contrasting the reputations of competing firms to find out if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders apprised as the case continues; 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, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.