Subrogation is an idea that's understood among legal and insurance professionals but often not by the customers who hire them. Even if it sounds complicated, it would be in your self-interest to comprehend an overview of the process. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay often compounds the damage to the victim – insurance companies usually opt to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, ultimately, they weren't in charge of the expense.
Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 person or property. But under subrogation law, your insurance company is given some of your rights 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.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that 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 insurer is timid on any subrogation case it might not win, it might opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total price 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 truck accident lawyers Duluth ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the records of competing agencies to determine if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.