Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to know an overview of the process. The more information you have about it, the better decisions you can make about your insurance policy.
An insurance policy you own is a promise that, if something bad occurs, the firm that covers the policy will make restitutions without unreasonable delay. If you get hurt at work, for example, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
You are in a vehicle accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely 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 way 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have 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 starters, if you have a deductible, your insurer wasn't the only one who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs 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 doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), 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 workmans comp Canton, ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth examining the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.