Subrogation is an idea that's understood among legal and insurance firms but rarely by the people they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your property is burglarized, for instance, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and delay sometimes adds to the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a means to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
You go to the hospital with a deeply cut finger. You hand the receptionist your medical insurance card and she records your coverage information. You get stitches and your insurance company gets a bill for the tab. But the next afternoon, when you get to your place of employment – where the accident happened – you are given workers compensation forms to fill out. Your workers comp policy is actually responsible for the payout, not your medical insurance. 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 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. Ordinarily, only you can sue for damages done to your self 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 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 who 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 timid on any subrogation case it might not win, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a competent legal team and goes after those cases 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 one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, 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 attorneys that specialize in auto accidents Norcross GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing agencies to determine if they pursue valid subrogation claims; if they do so without delay; if they keep their clients posted 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.