Subrogation is a term that's understood among legal and insurance companies but rarely by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to understand the steps of how it works. The more you know, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely manner. If you get hurt while you're on the clock, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Can You Give an Example?
Your electric outlet catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm do next?
How Does Subrogation Work?
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. Usually, 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 Do I Need to Know This?
For a start, if you have a deductible, it wasn't just your insurance company 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 costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost 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 workmans comp lawyer Milton, ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth researching the reputations of competing firms to determine if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation 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.