Subrogation is a term that's well-known among insurance and legal companies but sometimes not by the policyholders they represent. Even if it sounds complicated, it is to your advantage to understand the steps of the process. The more information you have about it, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a mechanism to get back the costs if, ultimately, they weren't actually in charge of the expense.
For Example
You go to the doctor's office with a sliced-open finger. You give the nurse your health insurance card and she writes down your policy information. You get stitches and your insurance company is billed for the medical care. But the next morning, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the costs, not your health insurance company. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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 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 Policyholders?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by increasing your premiums. On the other hand, if it has a capable 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 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 workmans comp lawyer Lithia Springs GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth examining the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.