Subrogation is a term that's well-known in insurance and legal circles but often not by the customers who employ them. Even if it sounds complicated, it would be to your advantage to comprehend an overview of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad occurs, the business on the other end of the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to get back the costs if, when all is said and done, they weren't responsible for the payout.
Your living room catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the damages. You already have your money, but your insurance company is out all that money. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer 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.
How Does This Affect Individuals?
For a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its costs by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, 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 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense 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 workmans comp lawyer Lithia Springs GA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth looking at the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.