Subrogation is a term that's well-known among insurance and legal companies but often not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you hold is a promise that, if something bad occurs, the business that insures the policy will make good in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay sometimes increases the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to recover the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Can You Give an Example?
You are in a car 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 that pays for the repairs right away. Later it's determined that the other driver was at fault and his insurance 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 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given 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 Do I Need to Know This?
For starters, if you have 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 upping your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. 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 responsible), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as car accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth weighing the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted 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 company has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.