Subrogation is a term that's well-known among legal and insurance firms but often not by the people who hire them. Even if you've never heard the word before, it is in your benefit to comprehend an overview of how it works. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is an assurance that, if something bad occurs, the business on the other end of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms often opt to pay up front and assign blame later. They then need a method to regain the costs if, ultimately, they weren't actually responsible for the payout.
You arrive at the hospital with a sliced-open finger. You give the nurse your medical insurance card and he writes down your policy information. You get stitched up and your insurance company is billed for the expenses. But the next day, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation forms to fill out. Your company's workers comp policy is actually responsible for the payout, not your medical insurance. The latter has a right to recover its costs somehow.
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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended some of your rights 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 starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by upping your premiums. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident lawyer Norcross GA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth weighing the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.