Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be to your advantage to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a promise that, if something bad occurs, the company that covers the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay often compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. They then need a method to recoup the costs if, ultimately, they weren't in charge of the expense.
You rush into the doctor's office with a deeply cut finger. You give the nurse your health insurance card and she writes 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 workplace – where the injury happened – you are given workers compensation paperwork to fill out. Your company's workers comp policy is actually responsible for the expenses, not your health 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 process 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 Do I Need to Know This?
For a start, if you have a deductible, it wasn't just your insurer who 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 insurer is timid on any subrogation case it might not win, it might opt to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total loss 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 workers compensation Columbus, ga, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance companies are not created equal. When comparing, it's worth looking up the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.