Subrogation is a concept that's understood in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it would be to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If you get hurt on the job, your employer's workers compensation pays out 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 often a time-consuming affair – and delay often compounds the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, in the end, they weren't in charge of the payout.
You rush into the doctor's office with a gouged finger. You hand the nurse your health insurance card and she records your policy information. You get taken care of and your insurer gets a bill for the tab. But on the following morning, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the payout, not your health insurance policy. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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 Policyholders?
For a start, 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 have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, 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 accountable), you'll typically get $500 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 workers comp lawyer Austell GA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth looking up the records of competing companies to find out if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their clients advised as the case goes on; 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 insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.