Subrogation is a concept that's understood among legal and insurance firms but often not by the people who employ them. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more information you have, the more likely an insurance lawsuit will work out favorably.
An insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your house suffers fire damage, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
Your living room catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. 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 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 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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.
Why Should I Care?
For starters, if you have 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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 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, depending on your state laws.
Furthermore, if the total expense 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 workmans comp Columbus, ga, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth looking up the reputations of competing firms to find out if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.