Subrogation is an idea that's well-known among legal and insurance companies but sometimes not by the policyholders 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 comprehend the steps of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is an assurance that, if something bad occurs, the business that insures the policy will make restitutions in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, when all is said and done, they weren't actually responsible for the payout.
You go to the doctor's office with a deeply cut finger. You give the receptionist your health insurance card and she records your plan information. You get stitched up and your insurer gets a bill for the expenses. But the next morning, when you get to work – where the injury happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance policy. 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 reimbursement 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 done to your person or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For starters, 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by raising your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them efficiently, 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 one-half responsible), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car injury lawyer Canton, ga, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.