Subrogation is an idea that's understood among legal and insurance firms but often not by the policyholders who employ them. Even if you've never heard the word before, it would be to your advantage to understand the nuances of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you own is an assurance that, if something bad happens to you, the firm that covers the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is often a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, when all is said and done, they weren't actually in charge of the payout.
Let's Look at an Example
You head to the hospital with a sliced-open finger. You hand the nurse your health insurance card and she writes down your coverage information. You get taken care of and your insurance company is billed for the tab. But on the following afternoon, when you arrive at your place of employment – where the injury occurred – you are given workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the costs, not your health insurance. The latter has an interest in recovering its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 extended 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.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by upping your premiums. On the other hand, if it has a proficient legal team and pursues those cases aggressively, 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as worker compensation terms Marietta GA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth contrasting the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so fast; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible 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 safeguarding its profitability by raising your premiums, you should keep looking.