Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of the process. The more information you have, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If your house is broken into, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay often adds to the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a way to recover the costs if, ultimately, they weren't actually responsible for the expense.
Can You Give an Example?
You head to the Instacare with a sliced-open finger. You give the receptionist your health insurance card and he records your coverage information. You get taken care of and your insurer gets a bill for the services. But on the following afternoon, when you get to work – where the accident occurred – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the costs, not your health insurance. 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 companies 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 done to your self or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. 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 responsible), you'll typically get $500 back, depending on your state laws.
In addition, 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 fall lawyer greater atlanta area, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking up the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders informed 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 insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.