Subrogation is a term that's understood in insurance and legal circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to know the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance company.
Any insurance policy you hold is a commitment that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If you get injured at work, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and delay often increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a path to regain the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was at fault and her insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some insurance firms 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 for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurer 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 be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its costs by boosting your premiums. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all 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, based on the laws in most states.
Furthermore, 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 workmans comp lawyer Alpharetta, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.