Subrogation is a concept that's well-known in insurance and legal circles but rarely by the customers who employ them. Even if you've never heard the word before, it would be in your benefit to understand the nuances of how it works. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you own is an assurance that, if something bad occurs, the company on the other end of the policy will make good in one way or another without unreasonable delay. If a hailstorm damages your house, for example, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a time-consuming affair – and delay sometimes adds to the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when all the facts are laid out, they weren't responsible for the payout.
For Example
You are in a traffic-light accident. Another car crashed into yours. Police are called, 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 at fault and her insurance policy should have paid for the repair of your car. How does your 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
For starters, if you have a deductible, your insurance company 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 insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as mableton personal injury lawyer, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.