Subrogation is an idea that's understood among legal and insurance firms but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to understand the nuances of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you have is an assurance that, if something bad happens to you, the company that insures the policy will make restitutions without unreasonable delay. If your house is broken into, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame after the fact. They then need a means to recover the costs if, ultimately, they weren't actually responsible for the payout.
Your electric outlet catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
How Subrogation Works
This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have 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.
How Does This Affect the Insured?
For starters, 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on your state laws.
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 costly. If your insurance company or its property damage lawyers, such as workers compensation Milton, ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth weighing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so quickly; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.