Subrogation is an idea that's well-known in insurance and legal circles but often not by the people who employ them. Rather than leave it to the professionals, it would be in your benefit to understand the nuances of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.
An insurance policy you own is a promise that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If your house is broken into, for instance, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay often adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when all is said and done, they weren't actually in charge of the expense.
Let's Look at an Example
You rush into the emergency room with a deeply cut finger. You hand the nurse your health insurance card and she writes down your plan information. You get stitches and your insurance company is billed for the medical care. But the next morning, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the costs, not your health insurance policy. The latter has a right to recover its money somehow.
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 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 insurance company is extended 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.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its expenses by increasing your premiums. On the other hand, if it has a capable legal team and goes after those cases 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost of an accident is more than 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 workmans comp Alpharetta, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth examining the records of competing firms to evaluate if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.