Rebus Marketing Agency

Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to understand an overview of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you have is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is typically a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to regain the costs if, when all the facts are laid out, they weren't responsible for the expense.

Can You Give an Example?

You go to the hospital with a gouged finger. You give the receptionist your health insurance card and he records your policy details. You get taken care of and your insurer is billed for the tab. But the next day, when you get to work – where the accident happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is actually responsible for the expenses, not your health insurance company. It has a vested interest in getting that money back 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 insurer is considered to have some of your rights for having taken care of 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 starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by boosting your premiums. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, 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 responsible), you'll typically get half your deductible back, depending on your state laws.

Moreover, if the total price of an accident is more than 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 Lawyer for Truck Accidents Mableton GA, pursue subrogation and succeeds, it will recover your costs as well as its own.

All insurance companies are not created equal. When comparing, it's worth weighing the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.