Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of the process. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is regularly a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Your electric outlet catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. You already have your money, but your insurance firm is out $10,000. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if your insurance policy stipulated 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 to blame), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmans comp Alpharetta, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.