Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you have is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is typically a confusing affair – and time spent waiting sometimes adds to 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 regain the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the damages. The home has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total loss 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 Workers comp austell, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth weighing the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.