Subrogation is a concept that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your benefit to comprehend the steps of the process. The more information you have about it, the more likely relevant proceedings will work out favorably.
An insurance policy you hold is a commitment that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If you get an injury while working, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay often compounds the damage to the policyholder – insurance firms often decide to pay up front and assign blame after the fact. They then need a mechanism to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. 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 damages. You already have your money, but your insurance firm is out all that money. What does the firm 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 insurance firms 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 self or property. But under subrogation law, your insurer 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 Policyholders?
For a start, if you have a deductible, it wasn't just your insurer that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by ballooning your premiums. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all 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 $500 back, depending on your state laws.
In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as truck accident lawyers Milton, ga, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth contrasting the records of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.