Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your property suffers fire damage, for instance, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay often increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
You rush into the doctor's office with a sliced-open finger. You hand the nurse your medical insurance card and she writes down your plan information. You get taken care of and your insurance company gets an invoice for the services. But on the following morning, when you arrive at work – where the injury happened – your boss hands you workers compensation forms to turn in. 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 in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 insurance company is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after those cases 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 50 percent responsible), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as car accident attorney Alpharetta ga, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.