Subrogation is a term that's well-known in legal and insurance circles but often not by the people who employ them. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of the process. The more information you have about it, the better decisions you can make about your insurance company.
An insurance policy you hold is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions without unreasonable delay. If your house is robbed, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Can You Give an Example?
You go to the doctor's office with a gouged finger. You hand the receptionist your medical insurance card and she writes down your plan information. You get taken care of and your insurer is billed for the tab. But the next day, when you clock in at your workplace – where the accident occurred – you are given workers compensation forms to fill out. Your company's workers comp policy is actually responsible for the costs, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident lawyer Mableton GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.