Subrogation is a term that's understood in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it is to your advantage to comprehend the steps of how it works. The more information you have, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If a windstorm damages your home, your property insurance agrees to pay you or facilitate 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 adds to the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a mechanism to regain the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
You rush into the Instacare with a deeply cut finger. You give the receptionist your health insurance card and she takes down your coverage details. You get stitched up and your insurance company gets a bill for the medical care. But the next afternoon, when you get to your place of employment – where the injury happened – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance policy. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
For starters, if your insurance policy stipulated 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues 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 to blame), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers comp lawyer Mableton GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing firms to find out if they pursue legitimate subrogation claims; if they do so without delay; if they keep their customers updated 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, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.