Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If you get injured while working, for example, your employer's workers compensation agrees to pay 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 usually a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a means to recover the costs if, when all the facts are laid out, 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 it's determined that the other driver was to blame and her insurance should have paid for the repair of your vehicle. How does your 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 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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.
How Does This Affect Me?
For a start, 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 lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by raising your premiums. On the other hand, if it knows which cases it is owed 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 one-half responsible), you'll typically get $500 back, depending on your state laws.
In addition, if the total expense 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 work injury Alpharetta, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When shopping around, it's worth examining the records of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.