Subrogation is a concept that's understood among legal and insurance firms but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to know the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If you get hurt on the job, for example, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a method to get back the costs if, when all is said and done, they weren't responsible for the expense.
Let's Look at an Example
You are in a traffic-light accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your car. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Usually, only you can sue for damages 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 that was originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if you have a deductible, your insurer 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar 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.
Furthermore, 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 workmans comp Columbus, ga, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.