Subrogation is an idea that's well-known among legal and insurance firms but often not by the people who hire them. Even if you've never heard the word before, it is to your advantage to understand an overview of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.
Every insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is often a heavily involved affair – and delay often compounds the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, when all is said and done, they weren't actually responsible for the payout.
For Example
You arrive at the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and she records your policy details. You get stitched up and your insurer gets an invoice for the tab. But the next morning, when you get to your workplace – where the accident occurred – you are given workers compensation forms to file. Your workers comp policy is in fact responsible for the payout, not your medical insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 Individuals?
For starters, if you have a deductible, it wasn't just your insurer 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 lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, 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 personal injury claims Powder Springs, GA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.