Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the customers who employ them. Rather than leave it to the professionals, it is in your benefit to know the steps of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance firms often decide to pay up front and assign blame later. They then need a mechanism to recover the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
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 liable for the damages. You already have your money, but your insurance company is out all that money. What does the company do next?
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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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 Should I Care?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss 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 workmen's compensation Columbus, ga, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth measuring the records of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients advised as the case proceeds; 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 reputation 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.