Subrogation is an idea that's well-known in legal and insurance circles but often not 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 understand the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and delay sometimes adds to the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Let's Look at an Example
You head to the Instacare with a gouged finger. You give the nurse your health insurance card and he writes down your coverage details. You get stitched up and your insurer gets an invoice for the medical care. But the next day, when you clock in at your place of employment – where the accident occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the costs, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights for having taken care of 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 the Insured?
For one thing, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by upping your premiums. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all of the money 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.
Additionally, if the total expense 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 workmen's compensation Milton, ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth researching the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders advised as the case goes on; 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 record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.