Subrogation is a term that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to know the steps of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you have is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while working, for instance, 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 responsible for services or repairs is sometimes a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, when all is said and done, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance policy should have paid for the repair of your car. How does your company get its funds back?
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 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 to your person or property. But under subrogation law, your insurer is given 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 Individuals?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its losses by raising your premiums. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all 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 $500 back, based on the laws in most states.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workmans comp lawyer Austell GA, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth examining the reputations of competing firms to evaluate if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.