Subrogation is a concept that's well-known among legal and insurance firms but rarely by the policyholders who employ them. Even if you've never heard the word before, it is to your advantage to comprehend the steps of how it works. The more you know, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make good in a timely fashion. If you get an injury on the job, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a means to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
Can You Give an Example?
You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely at fault and his insurance should have paid for the repair of your auto. How does your insurance company get its funds 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 companies 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 considered to have some of your rights in exchange for having taken care of 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 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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its expenses by upping your premiums. On the other hand, if it has a capable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as accident attorney austell, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not the same. When shopping around, it's worth weighing the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly 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 safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.