Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the people they represent. Even if it sounds complicated, it would be in your self-interest to know the nuances of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
Every insurance policy you own is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a way to recover the costs if, in the end, they weren't responsible for the expense.
Let's Look at an Example
You are in a highway accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your car. How does your company get its funds back?
How Does Subrogation Work?
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 companies 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 done to your self or property. But under subrogation law, your insurance company 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 the Insured?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues them efficiently, it is doing you a favor as well as itself. 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 one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
In addition, 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 auto accident attorney Norcross GA, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the records of competing agencies to find out if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.