Subrogation is a concept that's well-known among legal and insurance companies but rarely by the policyholders who hire them. Even if you've never heard the word before, it is to your advantage to know an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your property is burglarized, for instance, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
Can You Give an Example?
Your garage catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if you have a deductible, it wasn't just your insurer who 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 recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full 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, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workmans comp lawyer Canton, ga, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding 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 safeguarding its income by raising your premiums, you'll feel the sting later.