The Things You Need to Know About Subrogation

Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers who hire them. Even if it sounds complicated, it is to your advantage to understand the nuances of how it works. The more information you have, the more likely relevant proceedings will work out in your favor.

Any insurance policy you hold is a promise that, if something bad happens to you, the firm on the other end of the policy will make good without unreasonable delay. If your home is robbed, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is regularly a time-consuming affair – and delay often increases the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't actually responsible for the payout.

For Example

You are in a highway accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was at fault and his insurance should have paid for the repair of your auto. How does your company get its funds back?

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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.

Moreover, if the total price 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 attorneys that specialize in auto accidents Powder Springs GA, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurers are not the same. When shopping around, it's worth examining the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.

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