The Things You Need to Know About Subrogation
Subrogation is a term that's understood among legal and insurance companies but rarely by the customers they represent. Even if it sounds complicated, it is in your self-interest to understand the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is typically a confusing affair – and delay in some cases compounds the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
For Example
You rush into the doctor's office with a deeply cut finger. You hand the receptionist your medical insurance card and she records your plan details. You get stitched up and your insurance company gets an invoice for the services. But on the following morning, when you clock in at your place of employment – where the accident occurred – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the hospital trip, not your medical insurance company. The latter has a right to recover its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money 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 who 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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total cost 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 car accident attorney Duluth ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth contrasting the records of competing agencies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding 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 income by raising your premiums, you'll feel the sting later.