Subrogation is a term that's understood among legal and insurance firms but often not by the customers they represent. Even if you've never heard the word before, it would be in your benefit to understand the nuances of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is an assurance that, if something bad happens to you, the firm that insures the policy will make good in one way or another in a timely fashion. If you get injured at work, for example, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms often decide to pay up front and assign blame afterward. They then need a means to recoup the costs if, when all is said and done, they weren't actually responsible for the payout.
Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. The house has already been fixed up in the name of expediency, but your insurance firm is out ten grand. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 self or property. But under subrogation law, your insurance company is extended 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 one thing, 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by raising your premiums. On the other hand, if it has a capable legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers compensation Mableton GA, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their clients apprised as the case goes on; 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.