Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of how it works. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you have is a promise that, if something bad happens to you, the company that covers the policy will make good in one way or another without unreasonable delay. If you get hurt at work, your employer'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 typically a time-consuming affair – and delay often adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a means to regain the costs if, ultimately, they weren't actually in charge of the expense.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You give the nurse your medical insurance card and he records your policy details. You get stitches and your insurance company gets an invoice for the tab. But on the following afternoon, when you get to work – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the bill, not your medical insurance. The latter has an interest in recovering its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Normally, 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 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 your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses 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 efficiently, it is acting both in its own interests and in yours. 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 accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost of an accident is over 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 lawyer Norcross, Ga, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth contrasting the records of competing companies to determine if they pursue winnable subrogation claims; if they do so without delay; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.