Subrogation and How It Affects Your Insurance Policy

Subrogation is a term that's understood in legal and insurance circles but rarely by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to know an overview of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out in your favor.

Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a way to recover the costs if, in the end, they weren't in charge of the expense.

Let's Look at an Example

You rush into the hospital with a deeply cut finger. You hand the receptionist your medical insurance card and she writes down your plan details. You get stitches and your insurance company is billed for the medical care. But on the following day, when you arrive at your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the payout, not your medical insurance. It has a vested interest in getting that money back in some way.

How Subrogation Works

This is where subrogation comes in. It is the method 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 done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights 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.

Why Do I Need to Know This?

For one thing, 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by ballooning your premiums and call it a day. 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 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 the laws in your state.

Moreover, if the total price 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 auto accident mableton ga, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not created equal. When comparing, it's worth contrasting the records of competing companies to find out whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their clients advised as the case proceeds; 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 record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.