Subrogation is a concept that's understood among insurance and legal companies but often not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of the process. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, for instance, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a method to recoup the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
You arrive at the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and he records your policy details. You get stitched up and your insurance company gets an invoice for the tab. But on the following day, when you arrive at work – where the injury happened – you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the expenses, not your medical insurance policy. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, 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 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 Individuals?
For a start, if you have 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 be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all ten grand 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 half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 lawyers for car accidents Alpharetta ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth contrasting the reputations of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers posted 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, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.