Subrogation is a term that's well-known among legal and insurance firms 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 self-interest to understand the nuances of the process. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is a commitment that, if something bad happens to you, the firm that insures the policy will make good in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the victim – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, in the end, they weren't actually in charge of the payout.
Can You Give an Example?
You arrive at the doctor's office with a sliced-open finger. You give the receptionist your health insurance card and she takes down your coverage information. You get stitches and your insurer gets a bill for the medical care. But the next morning, when you clock in at work – where the injury occurred – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the hospital visit, not your health insurance company. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurer 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 – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by raising your premiums. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, 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 50 percent at fault), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmans comp attorney Columbus, ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking at the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses 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'll feel the sting later.