Subrogation is a term that's understood in insurance and legal circles but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to understand the nuances of how it works. The more you know, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your real estate burns down, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting often compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, in the end, they weren't in charge of the payout.
Let's Look at an Example
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator 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 loss. The home has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages done 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 your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price 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 personal injury attorney Marietta, GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When comparing, it's worth researching the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so fast; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.
