Subrogation is a term that's understood among legal and insurance firms but often not by the policyholders they represent. Even if it sounds complicated, it is in your self-interest to know the nuances of how it works. The more information you have about it, the more likely relevant proceedings will work out in your favor.
Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your real estate suffers fire damage, for instance, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a time-consuming affair – and delay in some cases increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame later. They then need a means to recover the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You arrive at the Instacare with a deeply cut finger. You hand the nurse your health insurance card and she takes down your plan details. You get stitches and your insurance company is billed for the tab. But the next afternoon, when you get to work – where the injury happened – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the payout, not your health insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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 you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its costs by boosting your premiums. On the other hand, if it has a capable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all of the money 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 accountable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total price 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 auto accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth contrasting the records of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.