Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers they represent. Even if it sounds complicated, it is in your benefit to know an overview of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you have is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If you get injured on the job, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a path to recover the costs if, when all the facts are laid out, they weren't in charge of the expense.
You are in a traffic-light accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely at fault and her insurance policy should have paid for the repair of your car. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 done to your self 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 Policyholders?
For a start, 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 lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total price 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 Dunwoody, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth comparing the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients advised as the case continues; 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, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.