Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to understand an overview of the process. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you hold is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions without unreasonable delay. If you get an injury on the job, your company's workers compensation insurance picks up the tab 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 time spent waiting in some cases increases the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, ultimately, they weren't actually responsible for the payout.
Can You Give an Example?
You are in a highway accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance policy should have paid for the repair of your car. How does your company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies 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 done to your self or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
For a start, if you have a deductible, it wasn't just your insurance company that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. 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 one-half responsible), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total price 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 worker compensation terms Smyrna GA, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth weighing the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding 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 profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.