Subrogation is an idea that's well-known among legal and insurance firms but sometimes not by the customers they represent. Even if it sounds complicated, it would be to your advantage to know the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get injured while you're on the clock, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy affair aa‚¬" and delay in some cases compounds the damage to the victim aa‚¬" insurance companies often decide to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, 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 to blame and his insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights for making good on 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 a start, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well aa‚¬" namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 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.
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 worker compensation terms Sandy Springs GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth researching the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements immediately 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 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.
