Subrogation is a term that's well-known in insurance and legal circles but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is a commitment that, if something bad occurs, the company on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to get back the costs if, when all is said and done, they weren't in charge of the expense.
Let's Look at an Example
You go to the Instacare with a deeply cut finger. You give the receptionist your health insurance card and she writes down your plan details. You get stitched up and your insurance company gets a bill for the tab. But on the following morning, when you arrive at work – where the accident occurred – you are given workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the costs, not your health insurance policy. 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 reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, your insurance company 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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by increasing your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases enthusiastically, 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 one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers compensation Canton, ga, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth researching the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.