Subrogation is a concept that's well-known in legal and insurance circles but often not by the customers who employ them. Even if you've never heard the word before, it is in your benefit to understand the steps of how it works. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you hold is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is regularly a heavily involved affair – and time spent waiting often compounds the damage to the victim – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
You go to the hospital with a deeply cut finger. You give the receptionist your medical insurance card and he takes down your plan details. You get taken care of and your insurance company is billed for the expenses. But on the following morning, when you get to work – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance policy. 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 way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Ordinarily, 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 one thing, if you have a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might opt to recoup its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as worker competition terms Austell GA, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.