Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to comprehend the steps of how it works. The more you know about it, the more likely relevant proceedings will work out in your favor.
Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance covers the damages.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a means to get back the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an Example
You head to the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and she takes down your coverage details. You get stitched up and your insurance company is billed for the services. But on the following day, when you arrive at your workplace – where the injury occurred – you are given workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the payout, not your medical insurance company. 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 method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended 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 Do I Need to Know This?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as car accident attorney Milton, ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth weighing the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.