Subrogation is a term that's well-known among legal and insurance professionals but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to comprehend the steps of the process. The more information you have, the better decisions you can make about your insurance company.
An insurance policy you have is an assurance that, if something bad occurs, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, for example, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a path to regain the costs if, ultimately, they weren't responsible for the payout.
For Example
You arrive at the doctor's office with a sliced-open finger. You hand the nurse your medical insurance card and he writes down your coverage details. You get taken care of and your insurance company is billed for the expenses. But on the following morning, when you arrive at your place of employment – where the injury occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the expenses, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as auto accident attorney decatur, ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth scrutinizing the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately 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 honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.