Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers who hire them. Rather than leave it to the professionals, it would be in your self-interest to comprehend an overview of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. If a blizzard damages your house, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't in charge of the expense.
For Example
You head to the Instacare with a deeply cut finger. You hand the nurse your medical insurance card and he takes down your coverage information. You get taken care of and your insurer gets an invoice for the expenses. But on the following afternoon, when you arrive at work – where the accident happened – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the hospital trip, 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights 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.
Why Does This Matter to Me?
For a start, if you have a deductible, your insurer wasn't the only one 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 timid on any subrogation case it might not win, it might opt to recover its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all of the money 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 responsible), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as worker compensation terms Lithia Springs GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.