Subrogation is a term that's well-known among legal and insurance firms but sometimes not by the people they represent. Even if it sounds complicated, it is to your advantage to know the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Any insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If a blizzard damages your house, for instance, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and delay often increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Can You Give an Example?
You head to the emergency room with a gouged finger. You hand the nurse your medical insurance card and she writes down your policy information. You get stitches and your insurance company gets an invoice for the expenses. But the next day, when you get to your workplace – where the accident occurred – you are given workers compensation forms to fill out. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance policy. The latter has an interest in recovering its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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. Normally, only you can sue for damages done 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 Should I Care?
For one thing, if you have a deductible, it wasn't just your insurance company 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 recover its expenses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers compensation Columbus, ga, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth looking up the records of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements immediately 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 honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.