Subrogation is an idea that's understood among insurance and legal professionals but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to comprehend the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Any insurance policy you hold is a promise that, if something bad occurs, the company that covers the policy will make good without unreasonable delay. If a fire damages your property, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a means to get back the costs if, ultimately, they weren't responsible for the expense.
For Example
You head to the hospital with a deeply cut finger. You give the nurse your medical insurance card and he records your coverage information. You get stitches and your insurer gets a bill for the expenses. But on the following afternoon, when you arrive at work – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance policy. 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 payment 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 extended 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 Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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 culpable), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as accident attorney decatur, ga, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.