Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to understand the steps of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If you get injured at work, your employer's workers compensation insurance 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 regularly a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a path to recoup the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You head to the Instacare with a deeply cut finger. You hand the nurse your health insurance card and he writes down your plan information. You get stitches and your insurer gets an invoice for the services. But on the following morning, when you get to work – where the injury occurred – you are given workers compensation forms to file. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance policy. The latter has an interest in recovering its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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 self 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 originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, based on the laws in most states.
In addition, 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 workers compensation Columbus, ga, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements right away 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 profitability by raising your premiums, you should keep looking.