Subrogation is an idea that's understood among insurance and legal firms but rarely by the policyholders who hire them. Even if it sounds complicated, it is to your advantage to know the nuances of the process. The more you know, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you hold is a commitment that, if something bad occurs, the firm that insures the policy will make good in one way or another without unreasonable delay. If you get hurt on the job, for instance, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and delay often compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, ultimately, they weren't responsible for the expense.
You rush into the hospital with a gouged finger. You give the nurse your health insurance card and he writes down your policy details. You get stitches and your insurer gets a bill for the expenses. But on the following day, when you arrive at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the payout, not your health insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 Does This Matter to Me?
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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss 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 workers compensation Lithia Springs GA, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the records of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.