Subrogation is a term that's understood among legal and insurance companies but often not by the people who employ them. Rather than leave it to the professionals, it would be in your self-interest to understand the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Your garage catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. You already have your money, but your insurance agency is out all that money. What does the agency do next?
How Subrogation Works
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 insurance firms 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 extended some of your rights 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.
How Does This Affect Me?
For one thing, if your insurance policy stipulated 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 the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, based on the laws in most states.
Additionally, 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 truck accident lawyers Alpharetta ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth comparing the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.