Subrogation is a concept that's understood in insurance and legal circles but rarely by the people who employ them. Even if it sounds complicated, it is in your benefit to comprehend the steps of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
An insurance policy you have is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay often increases the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, ultimately, they weren't responsible for the payout.
Can You Give an Example?
You are in a vehicle accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, 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 at fault and her 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 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 originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its expenses by ballooning your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, 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 at fault), you'll typically get $500 back, depending on your state laws.
Additionally, if the total loss of an accident is more than 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 Dunwoody, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth measuring the reputations of competing firms to find out whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers informed 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 insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.