The Things Every Insurance Policy holder Ought to Know About Subrogation
Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers who hire them. Even if it sounds complicated, it would be in your benefit to comprehend an overview of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your real estate suffers fire damage, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, ultimately, they weren't actually responsible for the payout.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You hand the nurse your medical insurance card and she records your coverage details. You get taken care of and your insurance company gets an invoice for the services. But on the following day, when you clock in at your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange 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.
How Does This Affect Policyholders?
For starters, if you have 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after them aggressively, it is acting both in its own interests and in yours. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident attorney Norcross GA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the records of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers advised as the case goes on; 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 company has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.