Subrogation is an idea that's understood among insurance and legal firms but often not by the people who employ them. Even if it sounds complicated, it is in your benefit to know the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get hurt at work, your company's workers compensation insurance picks up the tab 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 regularly a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. The house 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 way that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended 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 you have a deductible, your insurer 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as car accident attorney Canton, ga, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.