Subrogation is an idea that's understood among legal and insurance companies but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to know the steps of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you have is an assurance that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another in a timely manner. If your home burns down, for example, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a way to recover the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Can You Give an Example?
You rush into the hospital with a gouged finger. You hand the receptionist your medical insurance card and he takes down your coverage details. You get stitches and your insurance company gets a bill for the services. But on the following afternoon, when you clock in at your workplace – where the injury occurred – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has an interest in recovering 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 done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 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 lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 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 the laws in your state.
In addition, 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 attorney Norcross, Ga, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their accountholders posted 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 insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.