Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to know an overview of how it works. The more you know about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you have is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions without unreasonable delay. If you get hurt at work, for example, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and delay sometimes compounds the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Let's Look at an Example
You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money 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 who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 at fault), you'll typically get $500 back, depending on your state laws.
Furthermore, 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 workers comp attorney Lithia Springs 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 examining the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses 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 safeguarding its profitability by raising your premiums, you should keep looking.