What Every Policy holder Ought to Know About Subrogation

Subrogation is a term that's understood among insurance and legal professionals but rarely by the people they represent. Even if it sounds complicated, it would be in your benefit to understand an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.

An insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair โ€“ and time spent waiting often increases the damage to the policyholder โ€“ insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to regain the costs if, in the end, they weren't actually responsible for the expense.

Let's Look at an Example

You are in a vehicle accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have 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 Me?

For starters, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too โ€“ to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by raising your premiums. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as truck accident lawyers Canton, ga, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.