Subrogation is an idea that's understood in insurance and legal circles but often not by the people who hire them. Even if it sounds complicated, it is in your self-interest to understand the steps of how it works. The more you know, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in a timely fashion. If your home is robbed, for instance, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a method to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.
Can You Give an Example?
You head to the hospital with a gouged finger. You give the receptionist your medical insurance card and she records your policy information. You get stitched up and your insurance company is billed for the expenses. But the next afternoon, when you clock in at your workplace – where the accident occurred – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the expenses, 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 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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 one thing, if you have a deductible, your insurance company 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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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, depending on the laws in your state.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as accident attorney North Decatur, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth examining the records of competing companies to evaluate if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.