Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the people who employ them. 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 steps of how it works. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If your property suffers fire damage, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay often adds to the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a means to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
You head to the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and she records your plan information. You get stitches and your insurer is billed for the expenses. But the next day, when you arrive at work – where the accident occurred – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the costs, not your medical 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 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. Usually, only you can sue for damages done 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.
How Does This Affect the Insured?
For one thing, 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs by raising 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 responsible), you'll typically get $500 back, based on the laws in most states.
In addition, if the total expense 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 car accident attorney Norcross GA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking at the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.