Subrogation and How It Affects You

Subrogation is a concept that's understood among insurance and legal firms but often not by the people they represent. Rather than leave it to the professionals, it would be in your benefit to understand the steps of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you have is a commitment that, if something bad occurs, the company on the other end of the policy will make good without unreasonable delay. If your home is robbed, for example, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame after the fact. They then need a way to recoup the costs if, in the end, they weren't actually responsible for the expense.

Can You Give an Example?

You go to the emergency room with a gouged finger. You hand the nurse your medical insurance card and she takes down your coverage details. You get stitched up and your insurer gets an invoice for the services. But the next afternoon, when you get to work – where the injury happened – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the hospital trip, not your medical insurance. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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 done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its expenses by ballooning 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 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.

Moreover, if the total price 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 workmans comp attorney Canton, ga, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth comparing the records of competing companies to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.