Subrogation is a concept that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to understand the steps of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is an assurance that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is typically a confusing affair – and delay often adds to the damage to the victim – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Can You Give an Example?
You head to the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and she takes down your plan details. You get stitches and your insurance company is billed for the tab. But the next afternoon, when you get to your place of employment – where the injury happened – you are given workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the payout, not your medical insurance policy. 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 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 insurance firms 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 person or property. But under subrogation law, your insurance company is given some of your rights for making good on 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, it wasn't just your insurance company 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 insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total loss 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 car accident attorney Alpharetta ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers advised 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 insurer has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.