Subrogation is an idea that's understood in insurance and legal circles but rarely by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to understand an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is an assurance that, if something bad occurs, the business that insures the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, for instance, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay often compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a means to recover the costs if, in the end, they weren't actually in charge of the payout.
You arrive at the emergency room with a deeply cut finger. You hand the nurse your health insurance card and she takes down your coverage details. You get stitches and your insurer is billed for the medical care. But on the following day, when you arrive at your place of employment – where the injury happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital trip, not your health insurance. The latter has a right to recover its costs in some way.
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 to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of 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 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by ballooning your premiums. On the other hand, if it has a capable legal team and goes after them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 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 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 auto accident atlanta ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth weighing the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders 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, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.