Subrogation is a term that's well-known among legal and insurance firms but often not by the customers who hire them. Even if it sounds complicated, it is to your advantage to know the nuances of how it works. The more you know, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while you're on the clock, for example, your employer's workers compensation agrees to pay 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 regularly a confusing affair – and delay sometimes compounds the damage to the victim – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, in the end, they weren't in charge of the expense.
You arrive at the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and he writes down your coverage details. You get stitched up and your insurer is billed for the medical care. But the next morning, when you get to your place of employment – where the accident happened – you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the bill, not your medical insurance. The latter has a right to recover its money in some way.
How Subrogation Works
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 to your person or property. But under subrogation law, your insurer is given 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.
How Does This Affect the Insured?
For a start, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by ballooning your premiums. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmans comp Alpharetta, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth examining the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money 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 protecting its income by raising your premiums, you should keep looking.