Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
An insurance policy you own is an assurance that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another without unreasonable delay. If you get injured on the job, for instance, your employer'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 sometimes a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame later. They then need a means to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
You rush into the hospital with a gouged finger. You hand the receptionist your medical insurance card and he takes down your plan details. You get stitches and your insurance company gets a bill for the tab. But the next afternoon, when you get to your place of employment – where the accident occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the costs, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
For a start, 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 – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, 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 one-half at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, 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 workmans comp attorney Canton, ga, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth comparing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders informed as the case goes on; 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 insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.