Subrogation is a term that's understood in legal and insurance circles but often not by the people they represent. Rather than leave it to the professionals, it would be in your self-interest to comprehend the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If your property is broken into, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a heavily involved affair – and delay in some cases compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a path to recover the costs if, ultimately, they weren't actually responsible for the payout.
You rush into the doctor's office with a sliced-open finger. You hand the receptionist your medical insurance card and he takes down your policy information. You get taken care of and your insurance company is billed for the tab. But the next morning, when you clock in at your workplace – where the injury occurred – your boss hands you workers compensation forms to turn in. Your workers comp policy is actually responsible for the expenses, not your medical insurance. The latter has a right to recover its money somehow.
How Subrogation Works
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 person or property. But under subrogation law, your insurance company 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 Individuals?
For a start, if you have a deductible, it wasn't just your insurance company 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 insurance company is timid on any subrogation case it might not win, it might opt to get back its expenses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total loss of an accident is more than 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 Alpharetta GA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth measuring the records of competing agencies to find out if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses 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 covering its profit margin by raising your premiums, you should keep looking.