Subrogation is an idea that's well-known among legal and insurance firms but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the steps of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If a storm damages your house, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and delay sometimes adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Can You Give an Example?
You arrive at the doctor's office with a deeply cut finger. You hand the receptionist your medical insurance card and he takes down your coverage information. You get stitches and your insurer is billed for the services. But the next day, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is in fact responsible for the costs, not your medical insurance company. The latter has a right to recover its costs 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. Under ordinary circumstances, 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated 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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after 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 one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Auto accident lawyer Norcross GA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth weighing the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.