Subrogation is a concept that's understood in legal and insurance circles but often not by the policyholders who hire them. Rather than leave it to the professionals, it would be in your benefit to comprehend an overview of how it works. The more you know, the better decisions you can make about your insurance policy.
Any insurance policy you hold is a promise that, if something bad happens to you, the business that insures the policy will make good in one way or another without unreasonable delay. If your real estate burns down, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes increases the damage to the victim – insurance firms often opt to pay up front and assign blame afterward. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Can You Give an Example?
You go to the doctor's office with a sliced-open finger. You hand the nurse your health insurance card and she writes down your coverage details. You get stitches and your insurance company gets an invoice for the tab. But on the following afternoon, when you get to your workplace – where the injury occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the invoice, 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 process 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights for having taken care of 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 Me?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by upping 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 acting both in its own interests and in yours. 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 50 percent culpable), you'll typically get $500 back, depending on your state laws.
In addition, if the total cost 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 attorney Milton, ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible 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 should keep looking.