Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers who employ them. Rather than leave it to the professionals, it is in your benefit to comprehend the steps of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is a promise that, if something bad occurs, the firm that covers the policy will make good in one way or another without unreasonable delay. If a hailstorm damages your home, for example, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is sometimes a heavily involved affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, when all is said and done, they weren't actually in charge of the expense.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Happily, 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 reason to believe that a judge would find him liable for the loss. The home has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Subrogation Works
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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 Individuals?
For a start, 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 at fault), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost 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 attorney Columbus, ga, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the records of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case continues; 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 insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.