Subrogation is a concept that's well-known among insurance and legal firms but often not by the policyholders they represent. Rather than leave it to the professionals, it would be in your benefit to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you have is an assurance that, if something bad occurs, the company that covers the policy will make good in one way or another in a timely manner. If you get injured while working, for example, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a means to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
For Example
You go to the doctor's office with a sliced-open finger. You hand the receptionist your health insurance card and he takes down your coverage details. You get taken care of and your insurance company gets a bill for the services. But the next day, when you clock in at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the payout, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange 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, 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. 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 one-half accountable), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident marietta ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; 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 losses back and move on with your life. If, instead, an insurer has a reputation of honoring 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.