Subrogation is an idea that's understood in legal and insurance circles but rarely by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to understand the nuances of how it works. The more you know about it, the better decisions you can make about your insurance company.
Every insurance policy you own is an assurance that, if something bad happens to you, the company that covers the policy will make good in a timely fashion. If you get an injury while working, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Can You Give an Example?
You are in a car accident. Another car collided with yours. Police are called, you exchange insurance information, 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 entirely at fault and her insurance should have paid for the repair of your car. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies 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 done to your self or property. But under subrogation law, your insurer is extended 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 the Insured?
For a start, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its costs by raising your premiums. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is doing you a favor as well as itself. 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 at fault), you'll typically get $500 back, depending on your state laws.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as injury lawyers Smyrna GA, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth weighing the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so quickly; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring 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.