Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers who employ them. Even if it sounds complicated, it is in your benefit to comprehend an overview of the process. The more you know about it, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If your house suffers fire damage, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame later. They then need a way to regain the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
You head to the Instacare with a sliced-open finger. You give the nurse your medical insurance card and she takes down your plan information. You get stitched up and your insurance company gets an invoice for the services. But on the following afternoon, when you get to work – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the hospital visit, not your medical insurance company. 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 payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if you have 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by boosting your premiums. On the other hand, if it has a competent legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as car accident attorney Canton, ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth researching the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.