Subrogation is an idea that's understood among insurance and legal firms but sometimes not by the policyholders who employ them. Rather than leave it to the professionals, it would be in your self-interest to understand the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your real estate burns down, for instance, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a path to recoup the costs if, in the end, they weren't actually responsible for the expense.
You rush into the hospital with a gouged finger. You give the receptionist your health insurance card and she writes down your policy information. You get taken care of and your insurance company gets a bill for the medical care. But on the following morning, when you get to your place of employment – where the injury occurred – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance policy. The latter has an interest in recovering its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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.
Why Does This Matter to Me?
For one thing, if you have 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 have a stake in the outcome as well – namely, $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 increasing your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as work injury Alpharetta, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When shopping around, it's worth comparing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.