What Every Policy holder Ought to Know About Subrogation
Subrogation is an idea that's understood among insurance and legal firms but often not by the people they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend an overview of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance covers the damages.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame later. They then need a means to get back the costs if, once the situation is fully assessed, they weren't responsible for the expense.
For Example
You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your car. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 done to your self or property. But under subrogation law, your insurer is extended 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 Policyholders?
For starters, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose 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 enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost 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 auto accident lawyer Lithia springs GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth examining the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.