Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the customers they represent. Even if it sounds complicated, it would be to your advantage to understand an overview of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you hold is a promise that, if something bad happens to you, the firm that covers the policy will make restitutions in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't actually in charge of the payout.
Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. 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 damages. The home has already been fixed up in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Does Subrogation Work?
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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, 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.
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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all ten grand 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 culpable), you'll typically get $500 back, based on the laws in most states.
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 compensation Columbus, ga, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking up the records of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.