Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the steps of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If you get an injury at work, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to regain the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Let's Look at an Example
Your kitchen catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. The house has already been fixed up in the name of expediency, but your insurance agency is out all that money. 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 when it pays out a claim that turned out not to be its responsibility. 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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 the Insured?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases 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 one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total price of an accident is more than 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 attorneys that specialize in auto accidents Lithia springs GA, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth weighing the records of competing firms to evaluate if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their customers apprised as the case proceeds; 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, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.
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