Subrogation is an idea that's understood in legal and insurance circles but rarely by the customers 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 know an overview of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in a timely fashion. If you get injured while working, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't actually responsible for the expense.
You head to the emergency room with a sliced-open finger. You give the nurse your medical insurance card and she writes down your policy information. You get stitches and your insurer is billed for the tab. But the next day, when you clock in at your workplace – where the injury occurred – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the costs, not your medical insurance policy. The latter has a right to recover its costs in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 done to your person or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Me?
For one thing, if you have a deductible, your insurer wasn't the only one that 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 insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, 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.
In addition, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers comp lawyer Canton, ga, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth scrutinizing the records of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.