Subrogation is an idea that's well-known among legal and insurance firms but sometimes not by the customers who employ them. Even if it sounds complicated, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions without unreasonable delay. If a blizzard damages your property, for instance, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes compounds the damage to the victim – insurance companies often opt to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
You go to the hospital with a deeply cut finger. You hand the nurse your health insurance card and he takes down your plan information. You get stitched up and your insurer gets an invoice for the expenses. But the next day, when you get to your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the payout, not your health insurance. The latter has an interest in recovering its money somehow.
How Subrogation Works
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 person or property. But under subrogation law, your insurer is given some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, 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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss 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 Mableton GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth weighing the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses 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 income by raising your premiums, you should keep looking.