Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If you get injured at work, for instance, your company'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 accountable for services or repairs is often a time-consuming affair – and delay often compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame afterward. They then need a path to regain the costs if, ultimately, they weren't responsible for the payout.
For Example
Your living room catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the loss. You already have your money, but your insurance company is out ten grand. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person 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 the Insured?
For a start, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. 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 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as car accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth looking up the reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so without delay; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.