The Things Every Policy holder Ought to Know About Subrogation

Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the people they represent. Even if you've never heard the word before, it is in your benefit to understand the nuances of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.

But since determining who is financially accountable for services or repairs is often a heavily involved affair – and delay often increases the damage to the policyholder – insurance firms usually decide to pay up front and assign blame afterward. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

Let's Look at an Example

You are in a highway accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?

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 insurance firms 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 done to your person or property. But under subrogation law, your insurance company is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

For a start, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its losses by increasing your premiums. 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 $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident lawyer Marietta GA, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not the same. When comparing, it's worth examining the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they do so fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 protecting its profit margin by raising your premiums, you should keep looking.