Subrogation is a concept that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to comprehend an overview of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a promise that, if something bad happens to you, the company on the other end of the policy will make good in a timely fashion. If you get hurt while you're on the clock, for instance, your employer's workers compensation insurance pays out 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 time spent waiting often increases the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame later. They then need a path to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Your bedroom catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the loss. The house has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. 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 having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
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 lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by upping your premiums. On the other hand, if it has a competent legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, depending on your state laws.
Moreover, if the total price 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 auto accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing firms to evaluate if they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.