Subrogation is a concept that's understood in insurance and legal circles but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the steps of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is often a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a path to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Let's Look at an Example
You arrive at the doctor's office with a sliced-open finger. You give the nurse your health insurance card and she takes down your policy information. You get taken care of and your insurer gets an invoice for the expenses. But on the following afternoon, when you arrive at your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Individuals?
For a start, if you have a deductible, your insurer wasn't the only one who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, 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 one-half responsible), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total cost 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 accident attorney austell, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing companies to find out whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.